What is the payback period for each

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Reference no: EM132066628

Cucamonga Electronics Inc. is considering two new product lines; CD players and DVRs. Both require an immediate investment of $1,000,000. Cucamonga Electronics Inc. has a required rate of return of 14%.

Annual Net Cash Inflows

Year CD Players DVRs

1 305,450 500,000

2 305,450 350,000

3 305,450 300,000

4 305,450 250,000

5 305,450 40,000

Required. Calculate the NPV, Profitability Index for these two investments. What is the payback period for each? Which project, if any, should we pursue? Why?

Reference no: EM132066628

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