Question: 1. Based on the long-term increase in value, which project is the best choice? 2. Why is this project the best choice? 3. How does

1. Based on the long-term increase in value, which project is the best choice?

2. Why is this project the best choice?

3. How does your decision connect to the first financial principle, money has a time value?

1. Based on the long-term increase in value,

A B 4 Review the NPV for Project #1 5 Variable Amount 6 Discount rate (rate of return) 10% 7 Cash flow for year one $0.00 8 Cash flow for year two $100,000.00 9 Present value $82,644.63 10 Cost of investment $50,000.00 11 Net present value (NPV) $32,644.63 12 13 Review the NPV for Project #2 14 Variable Amount 15 Discount rate (rate of return) 10% 16 Cash flow for year one $50,000.00 17 Cash flow for year two $25,000.00 18 Present value $66,115.70 19 Cost of investment $50,000.00 20 Net present value (NPV) $16,115.70\f

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