1. Drummond Corporation is considering making an investment in Project A, which will require an initial cash outlay of $20,000. Project A is expected to generate cash inflows of $6,000 for year 1, $8,000 for year 2, $10,000 for year 3, and $7,000 for year 4. The firm's hurdle rate is 12%. What is the payback period for Project A?
A. 1.9 years
B. 2.6 years
C. 3.2 years
D. 4.0 years
2. Drummond Corporation is considering making an investment in Project A, which will require an initial cash outlay of $20,000. Project A is expected to generate cash inflows of $6,000 for year 1, $8,000 for year 2, $10,000 for year 3, and $7,000 for year 4. The firm's hurdle rate is 12%. What is the net present value for Project A?
A. $3,301
B. $4,529
C. $5,786
D. None of the above