Scenario 2 : Two mutually exclusive projects ( Project A and Project B ) are being evaluated.
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Question:
Scenario : Two mutually exclusive projects Project A and Project B are being evaluated. Both projects require an initial investment of $ The expected cash flows for each project are as follows:
Project A: Year : $ Year : $ Year : $ Year : $
Project B: Year : $ Year : $ Year : $ Year : $ The company's cost of capital is Required:
Calculate the NPV for both Project A and Project B using the provided cost of capital. Round to the nearest whole dollar
Considering only NPV which project would you recommend, and why? Bonus Challenge: This question requires a financial calculator or spreadsheet with IRR function
Calculate the IRR for Project A and BNote: You can mention that a financial calculator or spreadsheet is required for this calculation
Considering only project to be prioritized, which project will you recommend?
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