Solve Part $5$: What is the paybacki pariad for project A$?$

Comect $$

Payback pariod is the length of fme requined to "necover the cost of an

investment in a nominal sense $($not adjusted for the time value of maney?

The projacts pays back $$10,000+$$$20,000=$$$30,000$ in the frst two years.

Assuming that the cosh flows occur wanly throughout year $3,$ the nemaining

$$57,000-$$$30,000=$$$27,000$ ane recovered in $$27,\frac{000}{\text{\$}}30,000=0\mathrm{.}9$ years.

Paytark $-$ Years before full cust recovery $+\frac{\text{R}\text{e}\text{m}\text{a}\text{i}\text{n}\text{i}\text{n}\text{g}costto\text{r}\text{e}\text{c}\text{o}\text{v}\text{e}\text{r}}{\text{C}\text{a}\text{s}\text{h}\text{f}\text{l}\text{o}\text{w}\text{d}\text{u}\text{r}\text{i}\text{n}\text{g}\text{t}\text{h}\text{e}\text{y}\text{e}\text{a}\text{r}}$

$=2+\frac{27,000}{30,000}$

$=2\mathrm{.}8$

Part $2$

What is the payback pariod for project a$?$

Comset $\sqrt[\phantom{2}]{?}$

The projacts pays back $$30,000+$$$20,000=$$$50,000$ in the frst two years.

Assuming that the osah flows occur cwanly thraughout year $3,$ the remaining

$$57,000-$$$50,000=$$$7,000$ are recovered in $$7,000110,000=0\mathrm{.}7$ years.

Paybark $-$ Years before full cost recuvery $+\frac{\text{R}\text{e}\text{m}\text{a}\text{i}\text{n}\text{i}\text{n}\text{g}costto\text{r}\text{e}\text{c}\text{o}\text{w}\text{e}\text{r}}{\text{C}\text{a}\text{s}\text{h}\text{f}\text{l}\text{o}\text{w}\text{d}\text{u}\text{r}\text{i}\text{n}\text{g}\text{t}\text{h}\text{e}\text{y}\text{e}\text{a}\text{r}}$

$=2+\frac{7,000}{10,000}$

$=2\mathrm{.}7$

Part $3$

Which projact seams batter according to the payback mothod?

Praject B

Project A$.$

imsect $\sqrt[\phantom{2}]{?}$

Praject B$\text{'}$s payonck of $2\mathrm{.}7$ yoars is loss than project A$\text{'}$s $29$ years. Projoct B is

thus battar.

Part $4$

What is the NPV for project. A$?$

Comect $$

$NP{V}_A--57,000+\frac{10,000}{1\mathrm{.}05}+\frac{20,000}{{1\mathrm{.}08}^2}+\frac{30,000}{{1\mathrm{.}08}^3}+\frac{40,000}{{1\mathrm{.}08}^4}$

$=22,622$

Using a frnancial calculator:

Part $5$

What is the NPV for project B$?$