Question

Q2) A firm has a WACC of 8.64% and is deciding between two mutually exclusive projects. Project A has an initial investment of $61.55. The additional cash flows for project A are: year 1 = $19.98, year 2 = $38.47, year 3 = $61.67. Project B has an initial investment of $72.32. The cash flows for project B are: year 1 = $59.90, year 2 = $35.62, year 3 = $28.78. Calculate the Following:

a) Payback Period for Project A:

b) Payback Period for Project B:

c) NPV for Project A:

d) NPV for Project B:

Answer 1