A company is considering two short-term projects: Month A B 0 -$1,200 -$1800 1 $0 $ 400
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Question:
A company is considering two short-term projects:
Month A B
0 -$1,200 -$1800
1 $0 $ 400
2 $200 $ 400
3 $300 $ 300
4 $400 $ 500
5 $500 $ 200
6 $600 $ 100
a. Based on the undiscounted payback period, which project is preferred?
b. Calculate the benefit-cost ratio for each alternative (use excel)
c. Based on the benefit-cost ratio analysis method, which project is preferred?
(Show and explain your solution)
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