question archive Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative
Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative
Subject:FinancePrice: Bought3
Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative. Project A and B have the cash flows as shown and Inatech uses a required rate of return of 10% and an inflation rate of 2%. Compute the payback in years and the net present value for both projects and offer advice as to the best course of action.
|
Year |
A |
B |
|
0 |
-$100,000 |
-$400,000 |
|
1 |
$20,000 |
$75,000 |
|
2 |
$50,000 |
$100,000 |
|
3 |
$50,000 |
$150,000 |
|
4 |
$25,000 |
$150,000 |
|
5 |
$500,000 |
$750,000 |
