Problem 7-1 Calculating Payback Period and NPV

Tri Star, Inc., has the following mutually exclusive projects:

Year	Project A				Project B
0	$	14,200			$	9,600
1		8,800				4,300
2		7,400				3,800
3		2,100				6,200

Calculate the payback period for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Payback Period
Project A	years
Project B	years

Based on the payback period, which project should the company accept?

Project B

Project A

If the appropriate discount rate is 14 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	NPV
Project A	$
Project B	$

Based on the NPV, which project should the company accept?

Project B

Project A