Question: You are given the choice between two mutually exclusive projects (8 points): Project A: $20,000 initial investment $ 6,000 a year NCF for 6 years
You are given the choice between two mutually exclusive projects (8 points): Project A: $20,000 initial investment $ 6,000 a year NCF for 6 years Project B: $26,000 initial investment $5,300 a year in NCF for 9 years If the cost of capital is 6%, which project should you select if you will need this capacity for the indefinite future. Explain the basis for your decision. A number alone is not sufficient.
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