Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year
Question:
Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three-year cutoff for projects. The required return is 10 percent.
Year __________Project F __________Project G
0 .................. -$150,000 .............. -$235,000
1 ...................... 78,000 ................... 54,000
2 ...................... 54,000 ................... 72,000
3 ...................... 68,000 .................. 103,000
4 ...................... 60,000 ................. 139,000
5 ..................... 54,000 ................. 156,000
a. Calculate the payback period for both projects.
b. Calculate the NPV for both projects.
c. Which project, if any, should the company accept?
Payback PeriodPayback period method is a traditional method/ approach of capital budgeting. It is the simple and widely used quantitative method of Investment evaluation. Payback period is typically used to evaluate projects or investments before undergoing them,...
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Essentials of Corporate Finance
ISBN: 978-0078034756
8th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan