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Homework answers / question archive / Question 4There are two projects with equal payback period
Question 4There are two projects with equal payback period. Which of the two projects should the company invest in and why:
Project A returns $800’000 the first year, $200’000 the second year and $200’000 the third year
Project B returns $200’000 the first year, $800’000 the second year and $200’000 the third.
Project A , as larger payments are earlier in time leading to lower discounting of cash flow causing NPV to be higher
