Question: Angkas Corp. is considering two mutually exclusive projects. Both require an initial i nvestment of Php 10,000 at t = 0. Project S has an

  1. Angkas Corp. is considering two mutually exclusive projects. Both require an initial investment of Php 10,000 at t = 0. Project S has an expected life of 2 years with after-tax cash inflows of Php6,000 and Php8,000 at the end of Years 1 and 2, respectively. Project L has an expected life of 4 years with after-tax cash inflows of Php4,373 at the end of each of the next 4 years. Each project has a WACC of 9.25%, and Project S can be repeated with no changes in its cash flows. The controller prefers Project S, but the CFO prefers Project L. How much value will the firm gain or lose if Project L is selected over Project S, i.e., what is the value of NPV - NPV ?

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