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Gonzalez Company is considering two new projects with the following net cash flows. The companys required rate of return on investments is 10%. ( PV
Gonzalez Company is considering two new projects with the following net cash flows. The companys required rate of return on investments is 10%. (PV of $1, FV of $1, PVA of $1, and FVA of $1)
Note: Use appropriate factor(s) from the tables provided.
Year | Net Cash Flows |
|
| Project 1 | Project 2 |
Initial investment | $(60,000) | $(56,500) |
1. | 15,000 | 35,000 |
2. | 26,100 | 15,000 |
3. | 21,000 | 25,000 |
a Compute payback period for each project. Based on payback period, which project is preferred?
- Compute net present value for each project. Based on net present value, which project is preferred?
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