question archive Put yourself in the role of a CFO managing an organization that has just sold a large asset and received $2 million
Put yourself in the role of a CFO managing an organization that has just sold a large asset and received $2 million
Subject:FinancePrice: Bought3
Put yourself in the role of a CFO managing an organization that has just sold a large asset and received $2 million. The CEO tells you to look at the NPV and IRR of the following two projects and select the one that will provide the most return to the organization and recover the initial investment quickest. They both require the same initial investment of $2 million and 5-year time horizon to realize the total return. Assume a zero cost of capital.
Which would you choose and explain your reasoning? Please be specific.
Project one
IRR: 18.40%
NPV: $1,500,000
Project two
IRR: 13.05%
NPV: $1,500,000
