A 5-year housing project costing P500,000 is projected to give the following annual returns:

Year 1 - P 75,000

Year 2 - 150,000

Year 3 - 225,000

Year 4 - 300,000

Year 5 - 350,000

Will you accept the project? Why?

2.If the project in number 1 showed a reversed annual return as follows:

Year 1 - P350,000

Year 2 - 300,000

Year 3 - 225,000

Year 4 - 150,000

Year 5 - 75,000

Will you accept the project? Why? Which is better, the project in number 1 or the project in number 2 ? Why?

3.If you put P500,000.00 in number 1 in the bank. It will give you a compound interest of 10%. How much money will you have at the end of the 5-year period? How much would the present value of that amount be? Compute for the NPV. Which is the best, putting the money in project number 1? 2? Or 3? Why?

Answer rating: 100% (QA)

To evaluate the projects we need to consider the cash flows and calculate the net present value NPV ... View the full answer