Question
PQR Ltd. is considering an investment in either Project P or Project Q . Each project requires an initial investment of $600,000. The cash flows
PQR Ltd. is considering an investment in either Project P or Project Q. Each project requires an initial investment of $600,000. The cash flows are:
Year | Project P | Project Q |
0 | -$600,000 | -$600,000 |
1 | $150,000 | $200,000 |
2 | $200,000 | $150,000 |
3 | $250,000 | $100,000 |
4 | $300,000 | $50,000 |
a. Calculate the payback period for both projects. b. Determine which project has a higher NPV, assuming a discount rate of 12%.
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Linear Algebra And Its Applications
Authors: David Lay, Steven Lay, Judi McDonald
6th Global Edition
978-1292351216, 1292351217
