Reference no: EM131983242

Consider the following cash flows on two mutually exclusive projects for the Bahamas Recreation Corporation ("BRC") Year Board Game DVD 0 ($950) ($2100) 1 $700 $1500 2 $550 $1050 3 $130 $450 4 $100 $0 5 $75 $0 BRC management primarily uses two criteria in making investment decisions - NPV and discounted payback period. Additional analysis will be performed if the results of the analysis of NPV and payback period are inconclusive. For the purpose of your analysis assume that both projects require an annual return of 14% (discount rate). Calculate both the (discounted) payback period and the NPV for the two projects then answer this question by choosing the most correct statement out of the 6 statements listed below. Select one or more: a. The DVD project project has a shorter payback period but a lower NPV relative to the Board Game project, so additonal analysis will be needed. b. The DVD project has both a higher NPV and a shorter payback period -- Invest in the DVD project c. The Board Game project has a shorter payback period but a lower NPV relative to the DVD project, so additonal analysis will be needed. d. The Board Game project has a higher NPV but a longer payback period relative to the DVD project, so additonal analysis will be needed. e. The Board Game project has both a higher NPV and a shorter payback -- Invest in the Board Game project.