Calculate the payback period for project a and project b

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Reference no: EM131909890

1. X-treme Vitamin Company is considering two investments, both of which cost $22,000. The cash flows are as follows:

Year	Project A		Project B
1	$	25,000	$	22,000
2		12,000		11,000
3		8,000		14,000

Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

a-1. Calculate the payback period for Project A and Project B. (Round your answers to 2 decimal places.)

Project A year(s):

Project B year(s):

b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 8 percent. (Do not round intermediate calculations and round your final answers to 2 decimal places.)
Project A:

Project B:

2. Aerospace Dynamics will invest $155,000 in a project that will produce the following cash flows. The cost of capital is 10 percent. (Note that the fourth year's cash flow is negative.) Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.

Year	Cash Flow
1		$	45,000
2			57,000
3			60,000
4			(53,000	)
5			125,000

a. What is the net present value of the project? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and round your answer to 2 decimal places.)

Reference no: EM131909890

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