14. FINANCIAL ANALSIS (15 POINTS) We are developing two new Products: A and B. Both products involve a $20 million investment, and have a three year life. The cash flows and NPV for each product are shown below. All numbers in thousands of dollars PROJECT A CASH FLOW 0 1 2 Investment $ (20,000) Revenue $ 10,000 $ 20,000 $ 30,000 Expense (6,000) $ (6,000) $ (6,500) Cash Flow $ (20,000) $ 4,000 $ 14,000 $ 23,500 SOLUTIONS Payback (years) NPV (@10% discount rate) $12,863 NPV (@ 35% discount rate) $196 All numbers in thousands of dollars PROJECT B: CASH FLOW 1 2 Investment $ (20,000) Revenue 30,000 $ 15,000 $ 5,000 Expense (6,000) $ (6,000) $ (6,500 Cash Flow $ (20,000) $ 24,000 $ 9,000 $ (1,500) SOLUTIONS Payback (years) NPV (@10% discount rate) $8,129 NPV (@35% discount rate) $2,106 a) Calculate payback for each project (you can write as fraction) (4 points)