Your company is faced with two investment opportunities:
a) Invest R10 million in Project A, which will generate after-tax cash flows of R3,250,000 per annum over 4 years at a required rate of return of 10% per
annum; or
b) Invest R5 million in Project B, which will generate after-tax cash flows of R1,500,000 per annum over 5 years at a required rate of return of 10% per annum.

Your task:
• Calculate the Net Present Value for both Projects A and B
• Conclude which project, at face value, appears to be the better financial investment.

Answer rating: 100% (QA)

To calculate the Net Present Value NPV for both Project A and Project B we can use the formula N... View the full answer