a) Calculate the NPV of each of the projects

b) 2. In no more than 6 lines, explain which of the above projects you should select and why?

Consider the following information relating to the expected cash flows from two independent projects. The cash flows are expressed in real terms, the nominal discount rate is 10% p.a. and the expected inflation rate is 4% p.a. Time 0 1 2 3 4 5 6 Project 1 -$200,000 $50,000 $50,000 $50,000 $50,000 $50,000 Project 2 -$250,000 $65,000 $65,000 $65,000 $65,000 $65,000 $65,000