Intro

WH Smith Company is evaluating three projects: A$,$ B$,$ C$,$ with cash flows as given in the table. Each project requires an initial investment of $$97,000$ and has a required return of $10\%.$

Year A B C

$150,000020,000$

$240,00050,00040,000$

$320,00050,00040,000$

$410,00040,00040,000$

Part $1$

What is the payback period for project A $($in years$)?$

Part $2$

What is the payback period for project B $($in years$)?$

Part $3$

What is the payback period for project C $($in years$)?$

Part $4$

Which project is best based on the payback rule?

Project A

Project C

Project B

Part $5$

What is the NPV of project A$?$

Part $6$

What is the NPV of project B$?$

Part $7$

What is the NPV of project C$?$

Part $8$

Which project is best based on the NPV rule?

Project A

Project B

Project C