ACC501 GDB 2 Solution

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The following four mutually exclusive projects are under consideration by the ABC Company:

Approach Project A Project B Project C Project D
Payback period 2.88 3.2 2.88 2.89
NPV -1,280 2,560 2,560 -2,240
On the basis of results of above approaches which project you think is “The best one” and why?

Note: Your answer should be concise and to the point and give one line answer as
Project ________________
Reason: _______________

Solution:
Project = C

Reason = as it is higher NPV and short payback period so project C will be chosen