Future Tech Systems is considering two investment opportunities with the following cash flows. The required rate...
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- Future Tech Systems is considering two investment opportunities with the following cash flows. The required rate of return is 13%. PV of $1 (6%), PVA of $1 (6%), PV of $1 (13%), and PVA of $1 (13%).
Year | Project G | Project H |
0 | $(250,000) | $(200,000) |
1 | $70,000 | $50,000 |
2 | $80,000 | $60,000 |
3 | $90,000 | $70,000 |
4 | $100,000 | $80,000 |
a. Calculate the payback period for each project. Which project has the shorter payback period? b. Calculate the net present value for each project. Which project has the higher NPV?
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