14.1 A project (A) costs £3,000 today and is expected to generate a cash flow of £10,000 in a year’s time, whereas an alternative project (B) costing £4,000 today is forecast to generate

£12,000 in two years’ time. Calculate the net present value of each project, and state which project appears to be preferable.

Use a 10% p.a. discount rate. Relevant discount factors are:

Year 1 0.909 Year 2 0.826