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Calculate the payback period for each project

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Reference no: EM133002340

Question - As the Finance Manager of Green Plains Ltd you are to determine which project your company should invest in. Examine the data table below:

Project A Project B

Cost $350,000 $450,000

Future Cash Flows Year 1 130,000 170,000

Year 2 155,000 200,000

Year 3 170,600 250,000

Year 4 150,000 240,000

Year 5 130,000 180,000

Based on the table above you are required to:

a. Calculate the NPV for each project using the discount rate of 11.5% and determine the best option for Green Plains Ltd.

b. Calculate the Payback Period (PBP) for each project and determine the best option for Green Plains Ltd if the company maximum payback period is 2 years.

Reference no: EM133002340

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