7

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

Year		Project A		Project B
0		$31,000		$34,000
1		17,500		18,500
2		14,000		12,500
3		4,000		14,000

a-1.	Calculate the payback period for each project. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

5

The net present value method of capital budgeting analysis does all of the following except:

a- provide a specific anticipated rate of return.

b- discount all future cash flows.

c- use all of a project's cash flows.

d- incorporate risk into the analysis.

e- consider all relevant cash flow information

1

The difference between the present value of an investments future cash flows and its initial cost is the:

a- net present value.

b- discounted payback period.

c- payback period.

d- profitability index.

e- internal rate of return.