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X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows:   Year Project A Project B 1 $ 12,000   $ 10,000   2   8,000     6,000   3   6,000     16,000     Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B.  b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 10 percent.

X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows:   Year Project A Project B 1 $ 12,000   $ 10,000   2   8,000     6,000   3   6,000     16,000     Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a-1. Calculate the payback period for Project A and Project B.  b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 10 percent.

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter19: Capital Investment
Section: Chapter Questions
Problem 13E: Buena Vision Clinic is considering an investment that requires an outlay of 600,000 and promises a...
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X-treme Vitamin Company is considering two investments, both of which cost $10,000. The cash flows are as follows:

 

Year Project A Project B
1 $ 12,000   $ 10,000  
2   8,000     6,000  
3   6,000     16,000  
 


Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods.


a-1. Calculate the payback period for Project A and Project B. 

b-1. Calculate the net present value for Project A and Project B. Assume a cost of capital of 10 percent.

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