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Novell, Inc., has the following mutually exclusive projects. ...

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Finance

Novell, Inc., has the following mutually exclusive projects.

Year Project A Project B
0 $21,000 $24,000
1 12,500 13,500
2 9,000 10,000
3 3,000 9,000

a-1.

Calculate the payback period for each project. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)

a-2.

If the company's payback period is two years, which, if either, of these projects should be chosen?

  • Project A

  • Project B

  • Both projects

  • Neither project

b-1.

What is the NPV for each project if the appropriate discount rate is 17 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

b-2.

Which, if either, of these projects should be chosen if the appropriate discount rate is 17 percent?

  • Project A

  • Project B

  • Both projects

  • Neither project

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