Quattro, Inc. has the following mutually exclusive projects available. The company has historically used a four-year cutoff for projects. The required return is 11 percent. Year Cash Flow (A) Cash Flow (B) 0 −$50,000 −$60,000 1 6,000 7,000 2 9,000 12,000 3 20,000 22,000 4 25,000 20,000 The payback for Project A is ____ while the payback for Project B is ____. The NPV for Project A is _____ while the NPV for Project B is ____. Which project, if any, should the company accept?
Quattro, Inc. has the following mutually exclusive projects available. The company has historically used a four-year cutoff for projects. The required return is 11 percent. Year Cash Flow (A) Cash Flow (B) 0 −$50,000 −$60,000 1 6,000 7,000 2 9,000 12,000 3 20,000 22,000 4 25,000 20,000 The payback for Project A is ____ while the payback for Project B is ____. The NPV for Project A is _____ while the NPV for Project B is ____. Which project, if any, should the company accept?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Quattro, Inc. has the following mutually exclusive projects available. The company has historically used a four-year cutoff for projects. The required return is 11 percent.
| Year | Cash Flow (A) | Cash Flow (B) |
| 0 | −$50,000 | −$60,000 |
| 1 | 6,000 | 7,000 |
| 2 | 9,000 | 12,000 |
| 3 | 20,000 | 22,000 |
| 4 | 25,000 | 20,000 |
The payback for Project A is ____ while the payback for Project B is ____. The NPV for Project A is _____ while the NPV for Project B is ____. Which project, if any, should the company accept?
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