Question: our company is considering two projects, Project A and Project B. The expected cash flows from the projects are as follows: Project A: Initial Investment
our company is considering two projects, Project A and Project B. The expected cash flows from the projects are as follows: Project A: Initial Investment = $1,000,000; Year 1 = $300,000; Year 2 = $400,000; Year 3 = $500,000 Project B: Initial Investment = $1,500,000; Year 1 = $600,000; Year 2 = $700,000; Year 3 = $800,000 Using a discount rate of US 10-year government bond rate today + 2%, calculate the NPV and IRR for both projects and advise which project the company should choose. Justify your decision
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