Question: Project A, a five-year project has a projected net cash flow of $15,000 in year 1, $25,000 in year 2, $30,000 in year 3, $20,000
Project A, a five-year project has a projected net cash flow of $15,000 in year 1, $25,000 in year 2, $30,000 in year 3, $20,000 in year 4, and $15,000 in year 5. It will cost $50,000 to implement the project. a) If the required rate of return is 20 percent, conduct a discounted cash flow calculation to determine the NPV for project A. [2 marks] b) Another proposed project, Project B, is a similar five-year project which shows the calculated NPV of $15,730 based on the same rate of return (20%). Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? [1 mark]
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