Section 1 - Investment Analysis - Net Present Value (NPV)

Victoria Falls Hospital is expecting Project A and B to generate the following cash flows.

Determine the NPV at a cost of capital of 20%

Which project should be accepted?

Project A

	Years 0 1 2 3 4 5
Initial Investment ($20,000) Annual Cash Flows $10,000 $8,000 $12,000 $15,000 $26,000

Project B

	Years 0 1 2 3 4 5
Initial Investment ($28,000) Annual Cash Flows $8,000 $8,000 $8,000 $8,000 $8,000