Question
Future Tech Ventures is deciding between two high-tech projects. The required return is 11%. Year Project Alpha Project Beta 0 $(95,000) $(110,000) 1 $25,000 $28,000
Future Tech Ventures is deciding between two high-tech projects. The required return is 11%.
Year | Project Alpha | Project Beta |
0 | $(95,000) | $(110,000) |
1 | $25,000 | $28,000 |
2 | $30,000 | $35,000 |
3 | $35,000 | $40,000 |
4 | $40,000 | $45,000 |
a. Compute the payback period for each project. Which project is preferable based on this criterion?
b. Calculate the net present value for each project. Which project should be selected based on the NPV?
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Horngrens Accounting
Authors: Tracie L. Miller Nobles, Brenda L. Mattison, Ella Mae Matsumura
11th edition
978-0133851151, 013385115X, 978-0133866889
