Lutz Rockets, Inc. is considering investing in two mutually exclusive projects. To prevent any corporate espionage in the highly competitive rocket industry, the projects will be referred to as Project A and Project Z. Lutzs required rate of return on any capital investment is 10%.

Project A requires an initial cash outlay of $200,000; the project will generate net cash flows of $100,000 per year for each of the next three years. Project Z requires an initial cash outlay of $425,000; it will generate net cash flows of $200,000 per year for the next three years.

a. You will calculate the missing Payback, NPV, IRR and MIRR for each project within the multiple choice questions. You must show your calculator inputs. Project A Project Z

1. What is Project Zs traditional payback period?

Show Work:

A. 2.0 years

B. 2.125 years

C. 3.0 years

D. less than one year.