Question
STU Enterprises is evaluating two potential projects. The initial investment for each project is $1,000,000. The cash flows are as follows: Year Project X Project
STU Enterprises is evaluating two potential projects. The initial investment for each project is $1,000,000. The cash flows are as follows:
Year | Project X | Project Y |
0 | -$1,000,000 | -$1,000,000 |
1 | $250,000 | $300,000 |
2 | $300,000 | $250,000 |
3 | $350,000 | $200,000 |
4 | $400,000 | $150,000 |
a. Compute the payback period for each project. b. If the required rate of return is 15%, calculate the NPV for both projects and advise which one should be undertaken.
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College Algebra
Authors: Robert F Blitzer
7th Edition
013449492X, 9780134453262
