Question
Consider the following two mutually exclusive projects: Year Cash Flow (A) Cash Flow (B) 0 –$218,917...
Consider the following two mutually exclusive projects:
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | –$218,917 | –$16,419 |
| 1 | 25,700 | 5,985 |
| 2 | 53,000 | 8,370 |
| 3 | 58,000 | 13,931 |
| 4 | 420,000 | 8,655 |
Whichever project you choose, if any, you require a 6 percent
return on your investment.
What is the discounted payback period for Project A?
What is the discounted payback period for Project B?
Homework Answers
Answer #1
Project A:
Payback period = 3.30 years
Project B:
Payback period = 2.28 years
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