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An investor has two alternatives A and B. Also the other opportunities exist at 15% minimum rate return. The total money available for investment is
An investor has two alternatives A and B. Also the other opportunities exist at 15% minimum rate return. The total money available for investment is 100,000 and cash flow for alternative A and B are displayed in following tables: Project A: Includes investment of 25,000 dollars at present time which yields the income of 12,000 dollars for 6 years and the salvage value in the end of the sixth year is 25,000 dollars. C $25,0001 $12,0001 $12,0001 $12,0001 $12,0001 $12,0001-$12,000 3 A) L=$25,000 0 Project B: Includes investment of 100,000 dollars at present time which yields the income of 40,000 dollars for 6 years and the salvage value in the end of sixth year is 100,000 dollars C $100,0001 $40,0001-$40,0001 $40,0001 $40,0001 $40,0001 $40,000 L= $100,000 0 2 3 4 C: Cost, l:Income, L:Salvage Using ROR and NPV analysis, which investment is economically better? Please include the incremental analysis and show all your work
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