Which project should be selected according to the npv method

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Reference no: EM132661189

Tom Ford has the opportunity to choose between the following two mutually exclusive projects: Expected Net Cash Flows Year Project

Expected Net Cash Flows

Year Project A Project B

0 -$100,000 $100,000

1 60,000 33,500

2 60,000 33,500

3 - 33,500

4 - 33,500

Both projects have a 10% cost of capital.

Problem a. Calculate the Payback Period for each project.

Problem b. Which project should be selected according to the payback period method?

Problem c. Calculate the NPV of each project.

Problem d. Which project should be selected according to the NPV method?

Reference no: EM132661189

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