YEAR PROJECT A PROJECT B 0 13300 8700 1 7500 3400 2 6500 290

YEAR PROJECT A PROJECT B

0 -$13,300 -$8,700

1 7,500 3,400

2 6,500 2,900

1 15 16 17 18 19 20 21 22 23 24 25 2627 28 29 30 1 Mortin Luther King Jr. Day Gain the trust of your customers with a well- designed and fresh looking showroom. The CHI. Storefront offers everything you reed to put together your February 2018 Connect c Secure https://newconnect mheducation.com ipps e GettingStanedSecureLogn Chase 3 Imported From Fret .htm Help Week 3 Homework: Chapter 7 Net Present Value and Oth... alculations and round your answers to 2 decimal Calculate the payback period for each project. (Do not round intermediate c ploces, e.g, 32.16.) 10 points Project A Project ears Based on the payback period, which project should the company accept? Project B Project A Il the appropriate discount tate Is 12 percent, what is the NPV for each project? iDo not round intermediate calculations and round your answers to 2 decimal places, e.g- 32.16) Project JA Project t Based on the NPV, which project should the company accept? Project A Project B Prev lot 5 Next > RJ\'S AUTO REPAIR

Solution

Project A: 1 + (5800/6500) = 1 + 0.89 = 1.89

Project B: 2 + (2400/5300) = 2 + 0.45 = 2.45

The company should accept Project A which has a shorter payback period.

The company should accept Project B which has a higher NPV.

Project A	1.89 years
Project B	2.45 years