Question

RejuveNation needs to estimate how long the payback period would be for their new facility project. They have received two proposals and need to decide which one is best. Project Weights will have an initial investment of $200,000 and generate positive cash flows of

• $100,000 at the end of year 1,
• $75,000 at the end of year 2,
• $50,000 at the end of 3, and
• $100,000 at the end of year 4.

Project Waters will have an initial investment of $300,000 and will generate positive cash flows of

• $200,000 at the end of year of 1, and
• $150.000 at the end of years 2, 3, and 4.

The payback period for Project Weights = ____________________

The payback period for Project Waters = ____________________

Based on payback analysis, which project should the company choose?

Using the same cash flows and assuming an 8% discount rate, calculate the NPV for each project.

NPV for project Weights = ________________

NPV for project Waters = _________________

Please show your work for all calculations used to arrive at your answer.

Answer 1