What is payback period for investment 12 what is the net


Investment 1 has the following :

Cost of capital 9.5pecent

Initial invest =950,000

Year 1 cash flow=300,000Year 2 cash flow =200,000Year 3cash flow =200,000

Year 4 cash flow 150,000Year 5 cash flow 150,000

Investment 2

Cost of Capital 2pecent

Initial Investment 950,000

Year1 cash flow,$400,000,Year 2 cash flow 400,000,Year 3cash flow 500,000

Year 4 150,000 Year 5 150,000

1) What is payback period for investment 1&2

2) What IS THE NET PRESENT VALUE OF iNVESTMENTS1&2

3) What is the internal rate of return for investment 1 and 2

4) Which investmet would you choose and why.

Would you choose a different option if the cost of capitol was 18 percent

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