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Year

Project A

Project B

1

$12,000

$10,000>

2

$8,000>

>$6,000

3

$6,000

$16,000

[A] Which of the two projects should be chosen based on the payback method?

[B] Which of the two projects should be chosen based on the net present value method? Suppose  a cost of capital of ten percent.

[C] Should a firm normally have more confidence in answer a or answer b?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M916918

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