Question: Can someone help with this problem please? Discounted Cash Flow (Project) Interest rate/Cost of capital = 10% Present = Beginning of year 2022 Annual inflation
Can someone help with this problem please?
| Discounted Cash Flow (Project) | ||||||
| Interest rate/Cost of capital = | 10% | Present = Beginning of year 2022 | ||||
| Annual inflation rate = | 2.25% | |||||
| Investment | Net Profit | Investment | Net Profit | |||
| PROJECT 1 | PROJECT 2 | |||||
| Beginning of 2022 | $2,200,000 | ($2,200,000) | $3,280,000 | ($3,280,000) | ||
| Beginning of 2023 | $300,000 | $400,000 | ||||
| Beginning of 2024 | $650,000 | $1,200,000 | ||||
| Beginning of 2025 | $975,000 | $1,000,000 | ||||
| Beginning of 2026 | $1,230,000 | $2,085,000 | ||||
| NPV (no infl) = | NPV (no infl) = | |||||
| NPV (infl) = | NPV (infl) = | |||||
| IRR = | IRR = | |||||
| ROI (no infl) = | ROI (infl) | |||||
| If projects are selected based on NPV, would you choose Project 1 or Project 2? | ||||||
| If projects are selected based on IRR, would you choose Project 1 or Project 2? | ||||||
| Not considering inflation, in which year is Project 1's investment recovered? | ||||||
| Not considering inflation, in which year is Project 2's investment recovered? |
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