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RST Construction is evaluating the feasibility of two new projects. The cash flow projections are as follows. The required return is 13%.
Year | Project P | Project Q |
0 | -$500,000 | -$550,000 |
1 | $150,000 | $160,000 |
2 | $160,000 | $170,000 |
3 | $170,000 | $180,000 |
4 | $180,000 | $190,000 |
a. Compute the payback period for each project. b. Calculate the NPV and recommend which project should be undertaken.
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