Payback period and net present value, Financial Accounting

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Payback Period and Net Present Value

XYZ Software, Inc., has the following mutually exclusive projects.

Year

Project A

Project B

0

 $

-9,960   

 $

-10,400   

1

 

6,800   

 

5,800   

2

 

4,100   

 

2,900   

3

 

2,700   

 

6,900   







Requirement 1:

(a) What is the payback period for Project A?

  Payback period                                 years

(b) What is the payback period for Project B? (Round your answer to 3 decimal places. (e.g., 32.16))

  Payback period                                 years

Requirement 2:

(a) What is the NPV for Project A assuming a discount rate of 14 percent? (Negative amount should be indicated by a minus sign. Do not include the dollar sign ($).

  Net present value         $

(b) What is the NPV for Project B assuming a discount rate of 14 percent? (Do not include the dollar sign ($). Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.

  Net present value         $


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