Review the NPV results for each project, than answer the questions below,

Project 1:

Discount Rate (rate of return) 10%

Cash flow for year one $0.00

Cash flow for year two $100,000.00

Present value $50,000.00

Net present value $32,644.63

Project 2:

Discount rate (rate of return) 10%

Cash flow rate for year one $50,000.00

Cash flow rate for year two $25,000.00

Present value $66,115.70

Net present value $16,115.70

1. What does the NPV tell us about project 1 and why is this important?
2. What does the NPV tell us about project 2 and why is this important?
3. What does the IRR 41.42% tell us about project 1?
4. What does the IRR 36.6% tell us about project 2?
5. Based on the long term increase in value which project is the best choice for Just Running? Why is this project the best choice?
6. How does your decision connect to the first financial principle, money has a time value?

Answer rating: 100% (QA)

Okay lets go through the questions one by one 1 What does the NPV tell us about project 1 and why is this important The NPV of project 1 is 3264463 A positive NPV indicates that the project is expecte... View the full answer