1 Problem 5 2 3 4 5 6 7 8 Draconian Measures, Inc., is evaluating two independent projects. The company uses a 14% discount rate for such projects. Cost and cash flows are shown in the table. Company can afford to go ahead with only one of the two projects. Which one do you recommend? Pick at least two methods to analyze the projects. 9 Discount rate: 10 11 Project 1 12 Year 13 Cash flow: $ 14 15 16 17 18 Project 2 14.00% 0 (8,425,000) $ 1 3,250,000 $ 2 2,250,000 $ 19 Year 0 20 Cash flow: $ (11,368,000) $ 21 1 2,250,000 $ 2 3,250,000 $ 3 1,750,000 $ 4 1,500,000 $ 3 3,750,000 $ 23 222222 24 25 26 Introduction Example Problem 1 Problem 2 Problem 3 Problem 4 Poblem 5 Problem 6 5 6 7 1,250,000 $ 1,100,000 $ 4 4,000,000 $ 5 4,250,000 750,000 $ 8 500,000