I have the correct answers, just have a question regarding payback-- Why is payback for...
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I have the correct answers, just have a question regarding payback-- Why is payback for project A 2 years +(#) / (#) and payback for project B is 1 year + (#) / (#). I guess I'm confused on when I use year 2 vs year 1 for calculating payback A firm has a WACC of 13% and is deciding between two mutually exclusive projects. Project A has an initial investment of $65. The additional cash flows for Project A are the following: Year 1 = $16, Year 2 = $35, and Year 3 = $62. Project B has an initial investment of $74. The cash flows for Project B are as follows: Year 1 = $51, Year 2 = $46, and Year 3 = $33. Calculate the payback and NPV for each project. (Show all answers to two decimals.) Payback for A = 2.23 years Payback for B = 1.50 years NPV for A = $19.54 NPV for B = $30.03
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