TechForward Innovations is deciding between two investment projects with the following net cash flows. The...
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TechForward Innovations is deciding between two investment projects with the following net cash flows. The company's required rate of return on investments is 11%. (PV of $1, FV of $1, PVA of $1, and FVA of $1).
Year | Project ForwardA | Project ForwardB |
0 | $(650,000) | $(700,000) |
1 | $170,000 | $160,000 |
2 | $210,000 | $200,000 |
3 | $250,000 | $240,000 |
4 | $290,000 | $280,000 |
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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