Question: Kappa Electronics is considering two projects, each requiring an initial investment of $100,000. The projected cash flows are as follows: Year Cash Flows (Project G)
Kappa Electronics is considering two projects, each requiring an initial investment of $100,000. The projected cash flows are as follows:
Year | Cash Flows (Project G) | Cash Flows (Project H) |
0 | -100,000 | -100,000 |
1 | 30,000 | 50,000 |
2 | 40,000 | 30,000 |
3 | 50,000 | 40,000 |
4 | 60,000 | 20,000 |
a. Calculate the payback period for both projects. b. Compute the NPV for each project using a discount rate of 9%. Which project should Kappa Electronics select?
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