Question
Capital Budgeting Techniques Comparison : A company is evaluating two investment projects with the following cash flows: Project A: Initial investment of $200,000, net cash
Capital Budgeting Techniques Comparison: A company is evaluating two investment projects with the following cash flows:
Project A: Initial investment of $200,000, net cash inflows of $50,000 per year for 5 years. Project B: Initial investment of $300,000, net cash inflows of $80,000 per year for 7 years.
Using the payback period, net present value (NPV), and internal rate of return (IRR) methods, compare the investment attractiveness of the two projects and discuss the strengths and limitations of each capital budgeting technique.
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