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NexusCorp is evaluating two projects with the following net cash flows. The company's discount rate...

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Accounting

NexusCorp is evaluating two projects with the following net cash flows. The company's discount rate is 8%. (PV of $1 = 0.926, PVIFA of $1 = 3.993, FV of $1 = 1.080, FVA of $1 = 4.506)

Year

Project A Cash Flow

Project B Cash Flow

0

$(1,000,000)

$(800,000)

1

$300,000

$250,000

2

$350,000

$280,000

3

$400,000

$320,000

4

$450,000

$350,000

5

$500,000

$380,000

a. Calculate the payback period for both projects. Which project should be chosen based on the payback period?
 b. Determine the net present value for each project. Which project should be selected based on the net present value?

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