Use net present value and payback period method, Financial Accounting

Given the following cash flows for projects A and B:

  Year     Project A   Project B

    0       -100,000     -150,000   (Project Cost)

    1         25,000         50,000

    2         30,000         60,000

    3         35,000         70,000

    4         80,000         50,000

Assume that the cost of capital is 10%.

a. Use the net present value method to select the better of the two projects.

b. Use the payback period method to select the better of the two projects.

c. How does the IRR method differ from the above two?

Posted Date: 2/28/2013 5:02:07 AM | Location : United States







Related Discussions:- Use net present value and payback period method, Assignment Help, Ask Question on Use net present value and payback period method, Get Answer, Expert's Help, Use net present value and payback period method Discussions

Write discussion on Use net present value and payback period method
Your posts are moderated
Related Questions
General limitations of Net Present Value when applied to investment appraisal NPV is a generally used technique employed in investment appraisal but is subject to a number of r

Determine the future value of Rs.1000 compounded continuously for 5 year on the interest rate of 12 percent per year and contrast it along with annual compounding.   Solution :

Pinapple Inc. is deciding how to price its two lines of laptops, one of which is a light one for travel (which is called Light) and the other is a powerful one (called Power). Thes

By classifying by function Under this format, the expenses of the company are classified into 5 major categories i.e. Cost of sales [(opening stock + purchases – closing st


Holding company with a direct shareholding in sub-subsidiary company Under this type of structure, both the holding and subsidiary company have some shareholding in the sub-subsi

The discount rate used must normally reflect the weighted average cost of equity and debt taking into account the systematic risk of the investment. A company's weighted average co

The New York Jets have decided to go public and are offering new shares for $40. Since the Jets want to build a new stadium, the firm will retain all earnings and will not issue an

Q1. what are the roles and objective of FASB and IASB? Q2.what are the main reason for the joint project undertaken by the FASB and IASB? Q3.state some critics by individual and th

An investment project requires a net investment of $100,000. The project is expected to generate annual net cash inflows of $28,000 for the next 5 years. The firm's cost of capital