Question: please show me the solution method by details . 4. You work for the 3T company, which expects to earn at least 18 percent on
please show me the solution method by details .
4. You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. Below is the cash information for each project. Your analysts predict that inflation rate will be a stable 3 percent over the next 7 years. Which of the two projects would you fund if the decision is based only on financial information? Why? Omega Year YO Y1 Y2 Y3 Y4 Y5 Y6 Y7 Total Inflow 0 0 $ 150,000 220,000 215,000 205,000 197,000 100,000 1,087,000 Outflow $225,000 190,000 0 30,000 0 30,000 0 30,000 505,000 Netflow - 225,000 - 190,000 150,000 190,000 215,000 175,000 197,000 70,000 582,000 Alpha Year YO Y1 Y2 Y3 Y4 Y5 Y6 Y7 Total Inflow 0 $ 50,000 150,000 250,000 250,000 200,000 180,000 120,000 1,200,000 Outflow $300,000 100,000 0 50,000 0 50,000 0 30,000 530,000 Netflow - 300,000 -50,000 150,000 200,000 250,000 150,000 180,000 90,000 670,000
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