Solution-Compute the payback period for each project

Compute the payback period for each project

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Reference no: EM132850071

Problem - BioInov could lunch two new products onto the market. The expected cash flows and investments are represented in the table below. Assume that the required return in either investment is 6%.

Year	Nano Tests	Micro Kits
Initial Investment	-$11,000	-$11,000
Year 1	$2,000	$4,000
Year 2	$3,000	$4,000
Year 3	$4,000	$4,000
Year 4	$5,000	$4,000
Year 5	$6,000	$4,000

Required -

1. Compute the payback period for each project. If the company requires at most three years to recover the initial investment, should we accept either or both projects?

2. Compute the discounted payback period for each project. If the company requires at most three years to recover the initial investment, should we accept either or both projects?

3. Compute the NPV for each project. Should we accept either or both projects?

4. Compute the IRR for each project. Should we accept either or both projects?

5. If the projects are mutually exclusive (the company can only lunch one of the products), which should we choose?

Reference no: EM132850071

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Compute the payback period for each project

Reference no: EM132850071

Reference no: EM132850071

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