NPV and Payback Period. Kaleb Konstruction, Inc., has the following mutually exclusive projects available. The company has historically used a three- year cutoff for projects. The required return is 10 percent.
Year | Project F | Project G |
0 | −$125,000 | −$195,000 |
1 | 65,000 | 45,000 |
2 | 45,000 | 60,000 |
3 | 55,000 | 85,000 |
4 | 50,000 | 115,000 |
5 | 45,000 | 130,000 |
a. Calculate the payback period for both projects.
b. Calculate the NPV for both projects.
c. Which project, if any, should the company accept?
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