You work at a construction company with a stated cost of capital of 12%. Your company is currently deciding between two different projects. Project A will pay you $800,000 up front and $1.5 million after 4 years. You will have to spend $300,000 now, and $400,000 once a year for the next 4 years. Project B will pay you $1.2 million up front and cost you $1.1 million in 4 years.

Required

What is the net present value of Project A?

What is the net present value of Project B?

Answer rating: 100% (QA)

To calculate the net present value NPV of each project we need to discount the cash flows using the ... View the full answer