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Novell, Inc., has the following mutually exclusive projects.    Year Project A Project B   0 –$16,000...

Novell, Inc., has the following mutually exclusive projects.

  

Year Project A Project B
  0 –$16,000    –$19,000   
  1 10,000    11,000   
  2 6,500    7,500   
  3 2,500    6,500   

  

a-1.

Calculate the payback period for each project. (Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161.)


       

a-2.

If the company's payback period is two years, which, if either, of these projects should be chosen?

  • Project A

  • Project B

  • Both projects

  • Neither project

  

b-1.

What is the NPV for each project if the appropriate discount rate is 16 percent? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)


       

b-2.

Which, if either, of these projects should be chosen if the appropriate discount rate is 16 percent?

  • Project A

  • Project B

  • Both projects

  • Neither project
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Answer #1

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Home nert Page Layout Formulas Data Review View dd-Ins as Cut aCopy E AutoSum ー E ゴWrap Text в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format Sort &Find & Format Painter Formatting as Table Styles2 Clear Clipboard Alignment Number Cells Edting BG348 AZ BA BC BD BE BF BG BH Bl BJ 347 a-1 348 349 PROJECT A 350 351 352 353 354 355 356 PROJECT B 357 358 359 360 361 362 363 364 a-2 365 il 1 r | | RATION PBP ARR. external rate YEAR CFAT CCFAT 0 16000 16000 3 2500 3000 10000 6500 500 PAYBACK PERIOD- 1 YEAR CCFAT1/CFAT2 1 YEAR 6000/6500 (IGNORE NEGATIVE SIGN FOR CALCULATION) PAYBACK PERIOD 1.923 YEARS YEAR CFAT CCFAT 0 -19000 19000 11000 8000 7500 6500 6000 500 PAYBACK PERIOD- PAYBACK PERIOD- 2 YEARS CCFAT2/CFAT3 2 YEARS500/6500 (IGNORE NEGATIVE SIGN FOR CALCULATION) 2.077 YEARS PROJECT A: BECAUSE IT HAS PAYBACK PERIOD OF 1.923 YEARS LOWER THAN DESIRED PERIOD OF 2 YEARS MlRR NPV İRR REPLACEMENT S (HPR GMAM EAC MACRS RATIOCASHBUDGET L acc BOND EPS EBIT-REPLACEMENT- STats NPV L erences: JF8 01:44 21-01-2019Home nert Page Layout Formulas Data Review View dd-Ins Cut Σ AutoSum Wrap Text aCopy в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format Sort &Find & Format Painter Formatting as Table Styles2 Clear Clipboard Alignment Number Cells Edting BH380 AZ BA BC BD BE BF BG BH Bl BJ 365 b-1 366 367 368 369 370 371 372 373 374 375 b-2 376 377 378 379 380 381 382 383 il 1 r | | RATION PBP ARR. external rate CASH FLOW PROJECTA PV FACTOR AT 16% NOTE ON PV FACTOR YEAR PROJECT B AC ВС -19000 11000 7500 6500 1/1.16A0 1/1.16서 1/1.16A2 1/1.16A3 0 16000 10000 6500 2500 1 160.00 19000.00 9482.76 0.7434830.565573.72 4164.27 220.76 0.862 8620.69 0.641 1601.64 947.11 NPV PROJECT B AS IT HAS POSITIVE NPV MlRR NPV İRR REPLACEMENT S (HPR GMAM EAC MACRS RATIOCASHBUDGET L acc BOND EPS EBIT-REPLACEMENT- STats NPV L erences: JF17 01:48 21-01-2019

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