Future Tech Systems is considering two investment opportunities with the following cash flows. The required rate...
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Future Tech Systems is considering two investment opportunities with the following cash flows. The required rate of return is 13%. PV of $1 (6%), PVA of $1 (6%), PV of $1 (13%), and PVA of $1 (13%).
Year
Project G
Project H
0
$(250,000)
$(200,000)
1
$70,000
$50,000
2
$80,000
$60,000
3
$90,000
$70,000
4
$100,000
$80,000
a. Calculate the payback period for each project. Which project has the shorter payback period? b. Calculate the net present value for each project. Which project has the higher NPV?
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