Question: TechHub Inc. is evaluating two projects, Project Lambda and Project Sigma . Each project requires an initial investment of $700,000. The cash flows are: Year
TechHub Inc. is evaluating two projects, Project Lambda and Project Sigma. Each project requires an initial investment of $700,000. The cash flows are:
Year | Project Lambda | Project Sigma |
0 | -$700,000 | -$700,000 |
1 | $200,000 | $250,000 |
2 | $250,000 | $200,000 |
3 | $300,000 | $150,000 |
4 | $350,000 | $100,000 |
a. Determine the payback period for each project. b. If the discount rate is 9%, calculate the NPV for both projects and recommend which project should be undertaken.
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