Question: Optimal Solutions Inc. is comparing two projects with the following cash flows: Year Project I ($) Project J ($) 0 -150,000 -170,000 1 50,000 60,000
Optimal Solutions Inc. is comparing two projects with the following cash flows:
Year | Project I ($) | Project J ($) |
0 | -150,000 | -170,000 |
1 | 50,000 | 60,000 |
2 | 60,000 | 70,000 |
3 | 70,000 | 80,000 |
4 | 80,000 | 90,000 |
The discount rate is 9%.
Requirements: a) Compute the NPV for both projects. b) Calculate the IRR for both projects. c) Determine the profitability index for both projects. d) Recommend which project should be selected based on your calculations.
Step by Step Solution
There are 3 Steps involved in it
1 Expert Approved Answer
Step: 1 Unlock
Question Has Been Solved by an Expert!
Get step-by-step solutions from verified subject matter experts
Step: 2 Unlock
Step: 3 Unlock
Study Help