Green Innovations is evaluating two new projects with the following net cash flows. The company's...
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Green Innovations is evaluating two new projects with the following net cash flows. The company's required rate of return on investments is 14%. (PV of $1, FV of $1, PVA of $1, and FVA of $1).
Year | Project Green1 | Project Green2 |
0 | $(600,000) | $(650,000) |
1 | $140,000 | $130,000 |
2 | $180,000 | $170,000 |
3 | $220,000 | $210,000 |
4 | $260,000 | $250,000 |
a. Calculate the payback period for each project. Which project is preferred based on the payback period?
b. Calculate the net present value for each project. Which project is preferred based on the net present value?
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