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1 2 3. St. Rose Hospital expects Projects A and B to generate the following cash flows: Givens (in 'ooos) Years o 3 4 5

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1 2 3. St. Rose Hospital expects Projects A and B to generate the following cash flows: Givens (in 'ooos) Years o 3 4 5 1 Initial investment ($4,500) 2 Net operating cash flows $4,500 $3,500 $1,500 $700 $500 for Project A 3 Net operating cash flows $500 $700 $1,500 $3,500 $4,500 for Project B a. Determine the NPV for both projects using a cost of capital of 20 percent. b. Determine the NPV for both projects using a cost of capital of 10 percent. c. At a 10 percent cost of capital, which project should be accepted? At a 20 percent cost of capital, which project should be accepted? Explain. Asiste

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