The Red Fish Company is planning to invest in a major fish hatchery project. There have been two proposals for the investment - Project A and Project B, which are mutually exclusive. The required rate of return for both projects is 12%. The expected cost and benefit cash flows are shown in the following table. Calculate the net present value, IRR and Benefit-Cost Ratio for both projects and determine which project is better.

PROJECT APROJECT B

YEAR BENEFIT COST BENEFIT COST

0 0 25000 0 25000

1 12000 800 12000 500

2 8500 900 12000 500

3 13000 700 12000 500

4 10000 500 12000 500

Answer rating: 100% (QA)

First let me calculate the Net Present Value NPV for both projects NPV uses the formula NPV BenefitC... View the full answer