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Dear colleagues, anyone can help here with many thanks…
If I have two mutual exclusive projects to study which one a company should invest in (only one at a time), one project has a high NPV but with 3 years Payback and the other with lower NPV but with 2 years payback,the company hasnt specified any payback period limit,which one should i choose…is it the higher NPV or shorter payback..having the same risk.
Best reagrds
A.BadawiIf no payback period has been mentioned and there are no other factors mentioned in the question such as need for cash inflow then the project with the higher npv should be picked as this will maximize shareholder wealth.Hope this response helps you.
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