The Bingo Corporation is in the process of determining which of the following two projects that they may invest in. The details are provided in the attachment.
a. What is the payback period?
b. What is the net present value of the two projects?
c. What is the Internal rate of return of the two projects?
d. What is the profitability index?
e. Which of the two projects would you choose and which criteria would you use?
The solution explains the calculation of various capital budgeting parameters in an attached Word document and Excel file.