Question: Beta Tech Solutions is considering two software development projects. The required return is 10%. Year Project Blue Project Red 0 $(90,000) $(100,000) 1 $22,000 $26,000
Beta Tech Solutions is considering two software development projects. The required return is 10%.
Year | Project Blue | Project Red |
0 | $(90,000) | $(100,000) |
1 | $22,000 | $26,000 |
2 | $28,000 | $30,000 |
3 | $32,000 | $35,000 |
4 | $38,000 | $40,000 |
a. Compute the payback period for each project. Which project is preferable based on this criterion?
b. Calculate the net present value for each project. Which project should be selected based on the NPV?
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