Diaz Camera Company is considering two investments, both of which cost $16,000. The cash flows are as follows:

Use Appendix B.

Year	Project A			Project B
1	$	6,000		$	5,000
2		8,000			7,000
3		6,000			11,000

(a-1)

Calculate the payback period for project A and project B. (Round your answers to 2 decimal places.)

	Payback period
Project A	years
Project B	years

(a-2)

Which of the two projects should be chosen based on the payback method?

	Project A
	Project B

(b-1)

Calculate the net present value for project A and project B. Assume a cost of capital of 9 percent. (Round "PV Factor" to 3 decimal places, intermediate and final answers to the nearest dollar amount. Omit the "$" sign in your response.)

	Net present value
Project A	$
Project B	$

(b-2)

Which of the two projects should be chosen based on the net present value method?

	Project B
	Project A

(c)

Should a firm normally have more confidence in answer derived based on Net present value method or Payback method?

	Payback method
	Net present value method