Tech Innovations Inc. is analyzing two new projects with the following net cash flows. The...
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Tech Innovations Inc. is analyzing two new projects with the following net cash flows. The company's required rate of return on investments is 13%. (PV of $1, FV of $1, PVA of $1, and FVA of $1).
Year | Project Innovate1 | Project Innovate2 |
0 | $(500,000) | $(550,000) |
1 | $150,000 | $140,000 |
2 | $190,000 | $180,000 |
3 | $230,000 | $220,000 |
4 | $270,000 | $260,000 |
a. Determine the payback period for each project. Which project is preferred based on the payback period?
b. Determine the net present value for each project. Which project is preferred based on the net present value?
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