WH Smith Company is evaluating three projects: A, B, C, with cash flows as given...
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Finance
WH Smith Company is evaluating three projects: A, B, C, with cash flows as given in the table. Each project requires an initial investment of $99,000 and has a required return of 9%.
| Year | A | B | C |
| 1 | 50,000 | 0 | 20,000 |
| 2 | 40,000 | 50,000 | 40,000 |
| 3 | 20,000 | 50,000 | 40,000 |
| 4 | 10,000 | 40,000 | 40,000 |
What is the payback period for project A (in years)?
What is the payback period for project B (in years)?
What is the payback period for project C (in years)?
Which project is best based on the payback rule?
Project C
Project A
Project B
What is the NPV of project A?
What is the NPV of project B?
What is the NPV of project C?
Which project is best based on the NPV rule?
Project C
Project A
Project B
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