Novell, Inc., has the following mutually exclusive projects.
Year Project A Project B 0 â$21,000 â$24,000 1 12,500 13,500 2 9,000 10,000 3 3,000 9,000
a-1. Calculate the payback period for each project. (Do notround intermediate calculations and round your answers to 3 decimalplaces, e.g., 32.161.)
a-2. If the company's payback period is two years, which, if either,of these projects should be chosen?
Project A
Project B
Both projects
Neither project
b-1. What is the NPV for each project if the appropriate discountrate is 17 percent? (A negative answer should be indicatedby a minus sign. Do not round intermediate calculations and roundyour answers to 2 decimal places, e.g., 32.16.)
b-2. Which, if either, of these projects should be chosen if theappropriate discount rate is 17 percent?
Project A
Project B
Both projects
Neither project
Novell, Inc., has the following mutually exclusive projects. |
| Year | Project A | Project B | ||
| 0 | â$21,000 | â$24,000 | ||
| 1 | 12,500 | 13,500 | ||
| 2 | 9,000 | 10,000 | ||
| 3 | 3,000 | 9,000 | ||
| a-1. | Calculate the payback period for each project. (Do notround intermediate calculations and round your answers to 3 decimalplaces, e.g., 32.161.) |
| a-2. | If the company's payback period is two years, which, if either,of these projects should be chosen? |
|
| b-1. | What is the NPV for each project if the appropriate discountrate is 17 percent? (A negative answer should be indicatedby a minus sign. Do not round intermediate calculations and roundyour answers to 2 decimal places, e.g., 32.16.) |
| b-2. | Which, if either, of these projects should be chosen if theappropriate discount rate is 17 percent? |
|
Related questions
Robben Manufacturing has the following two possible projects. The required return is 10 percent.
| Year | Project Y | Project Z | |||
| 0 | â$ | 28,900 | â$ | 54,000 | |
| 1 | 14,900 | 12,500 | |||
| 2 | 13,300 | 40,000 | |||
| 3 | 15,700 | 10,500 | |||
| 4 | 11,300 | 38,000 | |||
a. What is the profitability index for each project? (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)
| Profitability index | ||
| Project Y | ||
| Project Z | ||
b. What is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
| NPV | |
| Project Y | $ |
| Project Z | $ |
c. Which, if either, of the projects should the company accept?
(Click to select)Project YNeitherProject Z
