LMN Corporation is evaluating two investment opportunities. The cash flows for each project are as...
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LMN Corporation is evaluating two investment opportunities. The cash flows for each project are as follows. The required rate of return is 8%.
Year | Project A | Project B |
0 | -$200,000 | -$150,000 |
1 | $60,000 | $50,000 |
2 | $70,000 | $60,000 |
3 | $80,000 | $70,000 |
4 | $90,000 | $80,000 |
a. Compute the payback period for each project. b. Calculate the NPV and determine which project is preferable.
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