Question
Novell, Inc., has the following mutually exclusive projects. Year Project A Project B 0 $34,000 $37,000 1 19,000 20,000 2 15,500 14,000 3 4,300 15,500
| Novell, Inc., has the following mutually exclusive projects. |
| Year | Project A | Project B | ||
| 0 | $34,000 | $37,000 | ||
| 1 | 19,000 | 20,000 | ||
| 2 | 15,500 | 14,000 | ||
| 3 | 4,300 | 15,500 | ||
| a-1. | Calculate the payback period for each project. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.) |
| a-2. | If the company's payback period is two years, which, if either, of these projects should be chosen? |
|
| b-1. | What is the NPV for each project if the appropriate discount rate is 16 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| b-2. | Which, if either, of these projects should be chosen if the appropriate discount rate is 16 percent? |
|
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