Tech Innovations Inc is considering two new projects with the following net cash flows. The required...
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- Tech Innovations Inc is considering two new projects with the following net cash flows. The required rate of return is 10%. PV of $1 (4%), PVA of $1 (4%), PV of $1 (10%), and PVA of $1 (10%).
Year | Project Alpha | Project Beta |
0 | $(300,000) | $(250,000) |
1 | $80,000 | $60,000 |
2 | $90,000 | $70,000 |
3 | $100,000 | $80,000 |
4 | $120,000 | $90,000 |
a. Compute the payback period for each project. Which project is preferred based on the payback period? b. Compute the net present value for each project. Which project is preferred based on the NPV?
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