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Cloud Innovations Inc. is considering two projects with the following net cash flows. The company's...

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Accounting

Cloud Innovations Inc. is considering two projects with the following net cash flows. The company's required rate of return on investments is 9%. (PV of $1, FV of $1, PVA of $1, and FVA of $1).

Year

Project CloudA

Project CloudB

0

$(600,000)

$(650,000)

1

$160,000

$150,000

2

$200,000

$190,000

3

$240,000

$230,000

4

$280,000

$270,000

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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