Problem $12-10($Algo$)$ Payback and net present value $[$LO$12-3,12-4]$

X$-$treme Vitamin Company is considering two investments, both of which cost $$46,000.$ The cash flows are as follows:

Year Project A Project B

$1$ $ $48,000$ $ $46,000$

$219,00021,000$

$316,00020,000$

Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a$-1.$ Calculate the payback period for Project A and Project B$.$

Note: Round your answers to $2$ decimal places.

a$-2.$ Which of the two projects should be chosen based on the payback method?

multiple choice $1$

Project A

Project B

b$-1.$ Calculate the net present value for Project A and Project B$.$ Assume a cost of capital of $8$ percent.

Note: Do not round intermediate calculations and round your final answers to $2$ decimal places.

b$-2.$ Which of the two projects should be chosen based on the net present value method?

multiple choice $2$

Project B

Project A