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The director of capital budgeting for Giant inc. has identified two mutually exclusive projects, L and S, with the following expected net cash flows: Expected
The director of capital budgeting for Giant inc. has identified two mutually exclusive projects, L and S, with the following expected net cash flows:
Expected net cash flows
year | project L | Project S |
0 | ($100) | ($100) |
1 | 10 | 70 |
2 | 60 | 50 |
3 | 80 | 20 |
Both projects have a cost of capital of 12 percent. what is the payback period for Project S?
A. 2.5 years
B. 1.8 years
C. 2.1 years
D. 1.6 years
E. 2.8 years
Both projects have a cost capital of 12 percent. What is Project L's PI?
A. 0.862
B. 1.115
C. 1.463
D. 1.514
E. 1.137
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