Question 1 A company has two projects to choose from with the following annual after-tax cash...

Transcribed Image Text:

Question 1 A company has two projects to choose from with the following annual after-tax cash flows: Project A Year 0 ($700,000) Year 1 ($300,000) Years 2-8 $700,000 Project B Year 0 ($1,600,000) Years 1-8 $725,000 The firm's cost of capital is 12 percent. Compute both projects' payback period and discounted payback period. (4 marks) Question 1 A company has two projects to choose from with the following annual after-tax cash flows: Project A Year 0 ($700,000) Year 1 ($300,000) Years 2-8 $700,000 Project B Year 0 ($1,600,000) Years 1-8 $725,000 The firm's cost of capital is 12 percent. Compute both projects' payback period and discounted payback period. (4 marks)