Question
Project A: Initial cost $-3000, returns $1000 per year for 4 years. Project B: Initial cost $-2500, returns $1100 per year for 4 years. Project
Project A: Initial cost $-3000, returns $1000 per year for 4 years. Project B: Initial cost $-2500, returns $1100 per year for 4 years. Project C: Initial cost $-3500, returns $1300 per year for 4 years.
a) Determine the NPV at 8% discount rate.
b) Identify the project(s) with positive NPV.
c) Calculate the payback period for each project.
d) Evaluate the projects if the payback period is limited to 3 years.
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
