Question - Jill Harrington, a manager at Jennings Company, is considering several potential capital investment projects. Data on these projects follow:
Project X Project Y Project Z
Initial investment $40,000 $20,000 $50,000
Annual cash inflows 25,000 10,000 25,400
PV of cash inflows 45,000 33,000 70,000
Required:
1. Compute the payback period for each project and rank order them based on this criterion.
2. Compute the NPV of each project and rank order them based on this criterion.