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Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return on Investments is 10%. (PV of
Gonzalez Company is considering two new projects with the following net cash flows. The company's required rate of return on Investments is 10%. (PV of $1, EV of $1. PVA of $1. and EVA of $1) (Use appropriate factor(s) from the tables provided.) Year Initial investment $ (60,000) 1. 30,000 2. 3. Net Cash Flows Project 1 Project 2 $ (60,000) 35,000 20,000 20,000 30,000 5,000 a. Compute payback period for each project. Based on payback period, which project is preferred? b. Compute net present value for each project. Based on net present value, which project is preferred? Complete this question by entering your answers in the tabs below. Required A Required B Compute payback period for each project. Based on payback period, which project is preferred? (Cumulative net cash outflows must be entered with a minus sign. Do not round your intermediate calculations. Round your Payback Period answer to 2 decimal places.) Project 1 Project 2 Year Net Cash Flows Cumulative Net Cash Flows Net Cash Flows Cumulative Net Cash Flowe Required A Required B Compute payback period for each project. Based on payback period, which project is preferred? (Cumulative net cash outflows must be entered with a minus sign. Do not round your Intermediate calculations. Round your Payback Period answer to 2 decimal places.) Project 1 Project 2 Year Cumulative Net Cash Flows Cumulative Net Cash Flows Net Cash Flows Net Cash Flows Initial investment (60,000) $ 60,000 $ (60.000) S 60.000 Year 1 30,000 30.000 35,000 35.000 Year 2 30,000 20,000 Year 3 5,000 5,000 Payback period Project 1 Payback period 2.00 years Project 2 Payback period 2.25 years Based on payback period, which project is preferred? Project 1 Required B>
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