Two investment projects which are mutually exclusive both require a $10,000,000 investment. Projected cash flows are provided
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Question:
Two investment projects which are mutually exclusive both require a $10,000,000 investment. Projected cash flows are provided in a table below. Given discount rate of 12 percent, calculate the net present value and profitability index for each project.
| Year | Project A | Project B |
|---|---|---|
| 1 | $3,500,000 | $6,500,000 |
| 2 | 3,500,000 | 3,000,000 |
| 3 | 3,500,000 | 3,000,000 |
| 4 | 3,500,000 | 1,000,000 |
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