Quattro,Inc.has the following mutually exclusive projects available.The company has historically used a four-year cutoff for projects.The required return is 11 percent. The payback for Project A is ____ while the payback for Project B is ____.The NPV for Project A is _____ while the NPV for Project B is ____.Which project,if any,should the company accept?
A)3.92 years; 3.64 years; $780.85; $1,211.48; accept both Project A and B
B)3.92 years; 3.79 years; -$211.60; $1,211.48; accept Project B only
C)3.92 years; 3.79 years; $780.85; -$7,945.93; accept Project A only
D)4.06 years; 3.64 years; $780.85; $1,211.48; accept both Project A and B
E)4.06 years; 3.79 years; -$211.60; -$7,945.93; reject both projects

Question

Quattro,Inc.has the following mutually exclusive projects available.The company has historically used a four-year cutoff for projects.The required return is 11 percent.  The payback for Project A is ____ while the payback for Project B is ____.The NPV for Project A is _____ while the NPV for Project B is ____.Which project,if any,should the company accept?
A)3.92 years; 3.64 years; $780.85; $1,211.48; accept both Project A and B 
B)3.92 years; 3.79 years; -$211.60; $1,211.48; accept Project B only 
C)3.92 years; 3.79 years; $780.85; -$7,945.93; accept Project A only 
D)4.06 years; 3.64 years; $780.85; $1,211.48; accept both Project A and B 
E)4.06 years; 3.79 years; -$211.60; -$7,945.93; reject both projects

Quizplus · Accepted Answer

Payback _A = 3 + ($82,000 - $15,700 - $18,300 - $23,900)/$26,200 = 3.92 yearsPayback _B = 3 + ($125,000 - $38,600 - $33,400 - $31,200)/$27,500 = 3.79 years