John is making a decision whether goinf forward with a project which has NPV of $2.5 million, operating for 6.75 year or another second project. The second project has the similar overall risk with the first one and it is expected to generate NPV of $2 million in total and will operate for 3 years.

The cost of capital discount rate is 12% (Effective Annual Rate).

Question: If both projects are mutually exclusive projects, which project should John choose?

Answer rating: 100% (QA)

To determine which project John should choose we can compare the Net Present Values NPVs of the two ... View the full answer