Question
Axis Corp. is considering an investment in the best of two mutually exclusive projects. Project Kelvin involves an overhaul of the existing system; it will
Axis Corp. is considering an investment in the best of two mutually exclusive projects. Project Kelvin involves an overhaul of the existing system; it will cost $ 60 comma 000 60,000 and generate cash inflows of $ 30 comma 000 30,000 per year for the next 3 3 years. Project Thompson involves replacement of the existing system; it will cost $ 260 comma 000 260,000 and generate cash inflows of $ 60 comma 000 60,000 per year for 6 6 years. Using a(n) 11.46 11.46% cost of capital, calculate each project's NPV, and make a recommendation based on your findings.
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