Question
Dynamic Solutions is evaluating two potential investments with the following cash flows. The required return is 15%. Year Project X Project Y 0 $(80,000) $(100,000)
Dynamic Solutions is evaluating two potential investments with the following cash flows. The required return is 15%.
Year | Project X | Project Y |
0 | $(80,000) | $(100,000) |
1 | $20,000 | $30,000 |
2 | $25,000 | $35,000 |
3 | $30,000 | $40,000 |
4 | $35,000 | $45,000 |
a. Calculate the payback period for both projects. Which project should be selected based on the payback period?
b. Determine the net present value for each project. Which project should be selected based on the net present value?
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
