Group Timbuktu Inc. has the following mutually exclusive projects. Year Project A

Group Timbuktu Inc. has the following mutually exclusive projects. Year Project A

Question:

Group Timbuktu Inc. has the following mutually exclusive projects. Year           Project A           Project B 0              -$7,500                 -$5,000 1                 4,000                     2,500 2                3,500                      1,200 3                2,500                       3,000 
a. suppose Group Timbuktu payback period cutoff is 2 years. Which of these 2 projects should be chosen?b. Suppose Group Timbuktu uses the NPV rule to rank these 2 projects. Which projects should be chosen if the appropriate discount rate is 15%.

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a Payback Period For Project A Initial Investment Year 0 7 500 Cash Flow at Year 1 4 000 Cash Flow a
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