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Yellow Duck Brewery Is Considering Two Similar Technology Investments to Help

question 31

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Yellow Duck Brewery is considering two similar technology investments to help track production.Investment (1)has an NPV of $245,000 and a payback period of 3 years.Investment (2)has an NPV of $250,000 and a payback period of 4.25 years.Which investment would you advise them to choose? Why?


Definitions:

z

A statistical measure that represents the number of standard deviations an element is from the mean of its population.

Standard Normal Random Variable

A variable that follows a normal distribution with a mean of 0 and a standard deviation of 1.

Area

In mathematics, Area refers to the measure of the extent of a two-dimensional surface or shape, expressed in square units.

z

A standard score indicating how many standard deviations an element is from the mean in a normal distribution.

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