Question: You are provided with the following data on two mutually exclusive projects. The cost of capital is 13%. Initial cash outflow Year 1 cash inflow
You are provided with the following data on two mutually exclusive projects. The cost of capital is 13%. Initial cash outflow Year 1 cash inflow Project 1 -$9,000 $9,000 $4,500 $2,489 Project 2 -$1,000 $1,000 $ 925 $ 609 1.61 Year 2 cash inflow NPV PI 1.28 Which project should you accept? What is the problem that you should be concerned with in making this decision? Project 1; the timing of cash flows Project 1: project scale Project 2, the timing of cash flows O Project 2: project scale
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