eck Engineering normally expects a minimum rate of return of 12% on investments. Two projects are available
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Question:
eck Engineering normally expects a minimum rate of return of 12% on investments. Two projects are available but only one can be chosen. Project A requires an immediate investment of $4,000,000. In return revenue payments of $4,000,000 will be received after 4 years and $9,000,000 after nine years. Project B requires an investment of,$4,000,000 now and another $2,000,000 at the start of the third year. In return revenue payments will be received in the amount of $1,500,000 per year for nine years.
Calculate the NPV of both projects. (6 Marks)
- Calculate the ROI of both projects. (4 Marks)
- Determine the payback period of both projects. (2 Marks)
- Which project would you choose? Why? (3 Marks)
Related Book For
Contemporary Business Mathematics with Canadian Applications
ISBN: 978-0133052312
10th edition
Authors: S. A. Hummelbrunner, Kelly Halliday, K. Suzanne Coombs
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