What is the payback period for each project

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X-treme Vitamin Company is considering two investments, both of which cost $20,000. The firm's cost of capital is 15 percent. The cash flows are as follows:

Year

Project A

Project B

1

12,000

10,000

2

8,000

6,000

3

6,000

16,000

What is the payback period for each project? Which project would you accept based on the payback period? .

What is the discounted payback for each project? Which project would you accept based on the discounted payback criterion?

Calculate the NPV of each project? Which project would you choose based on the NPV criterion?

Based on the IRR criteria which project would you choose if they were mutually exclusive.

Reference no: EM132060779

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