Calculate the payback period and net present value


Assignment:

A&B Enterprises is trying to select the best investment from amoung four alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follows:

Year    A           B           C            D

1     $10,000  $50,000  $25,000    $ 0

2      20,000    40,000   25,000       0

3      30,000    30,000   25,000    45,000

4      40,000      0        25,000    55,000

5     50,000

Evaluate and rank only investments A and B based on the a) payback period and b)net present value (use a 10% discount rate). Show your calculations.

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Financial Management: Calculate the payback period and net present value
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