Calculate for both projects A and B the:(a) Payback period; (b) Net Present Value (NPV); (c) Internal Rate of Return (IRR); (d) State which project you would recommend to Dreamon Corporation if ONE project can be selected (i.e. mutually exclusive). Give reason to support your decision. Question 1:You are the Finance Manager of Dreamon Corporation. Two capital budgeting projects are to beevaluated. The investment cost of each project is $15,000 and the cost of capital for eachproject is 10%. Further information for the projects is as follows:Project A9,7008,5005,500Project B5,2005,2005,200Year123

(A) Pay back period Year Project A Cumulative Cash Flow A Project B 1 9700 9700 5200 2 8500…

Business

Accounting

(c) Internal Rate of Return (IRR);

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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