Problem: The budget committee has received the following projects. They are mutually exclusive. The Company uses 10% as the rate of return.
Year Project A Project B
0 - 30,000 - 60,000
1 10,000 20,000
2 10,000 20,000
3 10,000 20,000
4 10,000 20,000
5 10,000 20,000
Total +20,000 + 40,000
NPV: +7,910 +15,820
Payback (Solve)
Which project would you recommend first and why?