Question: Consider the two projects with cash flows shown in the tables below. Project 1: Year 0 Cash flow -$10,000 1 $2,500 2 $3,500 3 $5,000

Consider the two projects with cash flows shown in the tables below. Project 1: Year 0 Cash flow -$10,000 1 $2,500 2 $3,500 3 $5,000 4 $4,000 5 $2,000 Project 2: Year Cash flow 0 1 $10,000 $2,500 2 $3,500 3 $4,000 4 5 $104,000 $102,000 a) Calculate the NPV and payback period for both projects using a discount rate of 12%. b) If the projects are mutually exclusive, which project should the firm choose based on NPV and payback period calculated in part a? Explain your
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
