Use the data from the second scenario to answer this question.

What is the pay back period for project B?

	A.	2 years
	B.	3 years
	C.	4 years
	D.	There is not one, this project stays negative.

Below are the estimated cash flows for two mutually exclusive projects for a company. The company has a WACC of 12%.

Cash flows in M $

year / project a / project b

0 /$(45,000.00) /$(12,000.00)

1 /$ 2,000.00 / $2,000.00

2 / $ 5,000.00 / $2,000.00

3/ $12,000.00 / $3,000.00

4 /$27,000.00 / $ 5,000.00

5 / $30,000 / $8,000.00

Use the data from the second scenario to answer this question.

• 

2 1 Year A 0 $(45,000.00) $(12,000.00) 1 $ 2,000.00 $ 2,000.00 4 2 $ 5,000.00 $ 2,000.00 5 3 $ 12,000.00 $ 3,000.00 6 4 $ 27,000.00 $ 5,000.00 5 $ 30,000.00 $ 8,000.00 8 MIRR 13.69% 14.21% 9 NPV $ 3,494.84 $ 1,232.45 10 IRRI 14.18% 15.17% A 1 Year A 20 -45000 - 12000 3 1 2000 2000 4 2 5000 2000 5 3 12000 3000 64 27000 5000 75 30000 8000 8 MIRR =MIRR(B2:B7,12%, 12%) =MIRR(C2:C7,12%, 12%) 9 NPV =NPV (12%,B3:B7)+B2 =NPV(12%, C3:C7+C2 10 IRR =IRR(B2:B7) =IRR(C2:07)