An investor is presented with two projects related to home technologies: Alexa Premium and Smart Speaker. By
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Question:
An investor is presented with two projects related to home technologies: Alexa Premium and Smart Speaker. By establishing a three-year time horizon, each project reports the following Net Cash Flows, as shown below:
Year | 1 | 2 | 3 |
Alexa Premium | $100.000 | $170.000 | $240.000 |
Smart Speaker | $72.000 | $112.000 | $152.000 |
Both projects require an initial investment of $200,000 and the discount rate is 12%.
Which project would you choose? Appropriately justify your answer.
Hint: You must calculate the NPV, IRR and Payback of each project
Expert Answer:
To determine which project to choose we can calculate the Net Present Value NPV Internal Rate of Ret... View the full answer
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