Question: 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

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
1 50,000 0 20,000
2 40,000 50,000 40,000
3 20,000 50,000 40,000
4 10,000 40,000 40,000

What is the payback period for projects A, B, and C (in years)?

Which project is best based on the payback rule?

What is the NPV of projects A, B, and C?

Which project is best based on the NPV rule?

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