Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / Kaiwen is trying to decide between two equally beneficial projects for investment purposes
Kaiwen is trying to decide between two equally beneficial projects for investment purposes. Project A requires an expenditure of $10,000 now and $700 for each of the next 5 years. Project B requires $12,000 now, $300 for each of the next 7 years, and an additional $1,200 eight years from now. If Kaiwen discount rate is 12% compounded annually, what is the net present value of the cost of each project? Which project do you recommend and why?
As Project B has lower equivalent annual cost than Project A. So, Project A should be chosen.
