Question
Consider the cash flow of the two projects depicted in Table 3. If WiseGuy Inc. uses payback period rule to choose projects, which of the
Consider the cash flow of the two projects depicted in Table 3. If WiseGuy Inc. uses payback period rule to choose projects, which of the projects (Project A or Project B) will rank highest? "
| TABLE 3 | ||
|
| Project A | Project B |
| Time 0 | -30,000 | -30,000 |
| Time 1 | 30,000 | 20,000 |
| Time 2 | 0 | 10,000 |
| Time 3 | 0 | 10,000 |
| Project A. | ||
| Project B. | ||
| Project A and Project B have the same ranking. | ||
| Cannot calculate a payback period without a discount rate. |
2.
Consider the cash flow of the two projects depicted in Table 3. If WiseGuy Inc. uses IRR rule to choose projects, which of the projects (Project A or Project B) will rank highest?
| Project A. | ||
| Project B. | ||
| Project A and Project B have the same ranking. | ||
| Cannot calculate a payback period without a discount rate. |
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Principles Of Finance
Authors: Scott Besley, Eugene F. Brigham
2nd Edition
003034509X, 9780030345098
