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X - treme Vitamin Company is considering two investments, both of which cost $ 3 4 , 0 0 0 . The cash flows are
Xtreme Vitamin Company is considering two investments, both of which cost $ The cash flows are as follows: Year Project A Project B $ $ Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a Calculate the payback period for Project A and Project B Note: Round your answers to decimal places. a Which of the two projects should be chosen based on the payback method? multiple choice Project A Project B b Calculate the net present value for Project A and Project B Assume a cost of capital of percent. Note: Do not round intermediate calculations and round your final answers to decimal places. b Which of the two projects should be chosen based on the net present value method? multiple choice Project B Project A c Should a firm normally have more confidence in the payback method or the net present value method? multiple choice Payback method Net present value method
Xtreme Vitamin Company is considering two investments, both of which cost $ The cash flows are as follows:
Year Project A Project B
$ $
Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.
a Calculate the payback period for Project A and Project B
Note: Round your answers to decimal places.
a Which of the two projects should be chosen based on the payback method?
multiple choice
Project A
Project B
b Calculate the net present value for Project A and Project B Assume a cost of capital of percent.
Note: Do not round intermediate calculations and round your final answers to decimal places.
b Which of the two projects should be chosen based on the net present value method?
multiple choice
Project B
Project A
c Should a firm normally have more confidence in the payback method or the net present value method?
multiple choice
Payback method
Net present value method
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