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Consumer Goods Corp is considering two projects, Project A and Project B. The cash flows for the projects are: Year Project A Project B 0
Consumer Goods Corp is considering two projects, Project A and Project B. The cash flows for the projects are:
Year | Project A | Project B |
0 | $(150) | $(200) |
1 | 50 | 60 |
2 | 60 | 70 |
3 | 70 | 80 |
4 | 80 | 90 |
The discount rate is 10%. Analyze and answer the following:
a. Calculate the payback period for each project. b. Determine the NPV for each project. c. Compute the IRR for both projects. d. Which project has the shorter payback period? e. Recommend which project should be accepted based on financial metrics and justify your choice.
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