22 Using the payback period parameter determine which projec

2.2. Using the \'payback period\' parameter determine which project is more effective. The volume of investment in the project A is 42,000 Euros, in the project B is 38,000 Euros. The implementation period of the international investment project A is 5 years, B is 3 years. Net present value of the project A is 39,000 Euros, project B is 36,000 Euros.

Solution

We will prefer B since it takes only 3 years to payback similar revenue vis a vis cost in to earn same profit