Question details

FIN 370 Wk 4 Team Assignment; Caledonia Products Integrative Problem
$ 15.00

The required rate of return on these projects is 11 percent.

 

a. What is each project’s payback period?

Project A’s payback period is 3.125 years.

Project B’s payback period is 4.5 years.

b. What is each project’s net present value?

            Project A NPV is $18,272

            Project B NPV is $18,600

b.             NPVA                 =        -  $100,000

                                            =      $32,000 (3.696) - $100,000

                                            =      $118,272 - $100,000

                                            =      $18,272

                NPVB                 =        -  $100,000

                                            =      $200,000 (0.593) - $100,000

                                            =      $118,600 - $100,000

                                            =      $18,600

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