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 $93,000 and has a required return of 10%.

YearABC150,000020,000240,00050,00040,000320,00050,00040,000410,00040,00040,000

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Part 1

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

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Part 2

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

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Part 3

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

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Part 4

Which project is best based on the payback rule?

Project C

Project B

Project A

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Attempt 1/5 for 10 pts.

Part 5

What is the NPV of project A?

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Part 6

What is the NPV of project B?

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Part 7

What is the NPV of project C?

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Part 8

Which project is best based on the NPV rule?

Project B

Project C

Project A

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