Question: Analyze the following cash flows for two projects with a WACC of 13%. Cash Flow Project A2 Project B2 Year 0 -$35,000 -$65,000 Year 1
Analyze the following cash flows for two projects with a WACC of 13%.
Cash Flow | Project A2 | Project B2 |
Year 0 | -$35,000 | -$65,000 |
Year 1 | $12,000 | $18,000 |
Year 2 | $20,000 | $25,000 |
Year 3 | $18,000 | $20,000 |
Year 4 | $10,000 | $15,000 |
- Calculate the NPV for both projects.
- Determine the IRR for both projects.
- Calculate the profitability index for each project.
- Decide which project is more favorable based on NPV and IRR.
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