Group Timbuktu Inc. has the following mutually exclusive projects. 

Year           Project A           Project B

 0              -$7,500                 -$5,000 

1                 4,000                     2,500 

2                3,500                      1,200 

3                2,500                       3,000 

a. suppose Group Timbuktu payback period cutoff is 2 years. Which of these 2 projects should be chosen?

b. Suppose Group Timbuktu uses the NPV rule to rank these 2 projects. Which projects should be chosen if the appropriate discount rate is 15%.

Answer rating: 100% (QA)

a Payback Period For Project A Initial Investment Year 0 7500 Cash Flow at Year 1 4000 Cash Flow at ... View the full answer