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UVW Ltd. is considering two projects, Project Sun and Project Moon, requiring initial investments of...

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Accounting

UVW Ltd. is considering two projects, Project Sun and Project Moon, requiring initial investments of EUR 90,000 each. The cash flows are as follows:

Year

Cash Flows (Project Sun)

Cash Flows (Project Moon)

Initial Investment

(90,000)

(90,000)

1

35,000

30,000

2

30,000

25,000

3

25,000

20,000

4

20,000

15,000

a. Compute the Payback Period for each project.

b. Which project should the company invest in based on the shortest payback period?

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