Question: XYZ Ltd is considering two projects A and B. The details of the projects are given below: Project A: The project requires an initial investment

XYZ Ltd is considering two projects A and B. The details of the projects are given below:

Project A: The project requires an initial investment of $300,000 and is expected to generate cash flows of $100,000, $150,000, and $200,000 at the end of the first, second, and third years, respectively.

Project B: The project requires an initial investment of $400,000 and is expected to generate cash flows of $150,000, $200,000, and $250,000 at the end of the first, second, and third years, respectively.

The cost of capital for XYZ Ltd is 10%. Determine which project XYZ Ltd should choose based on the net present value (NPV) method.

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