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Chandler Tine Co. is trying to decide which one of two projects it should accept. Both projects have the same start-up costs. Project 1 will
Chandler Tine Co. is trying to decide which one of two projects it should accept. Both projects have the same start-up costs. Project 1 will produce annual cash flows of $62,000 a year for six years. Project 2 will produce cash flows of $48,000 a year for years. The company requires a 15 percent rate of return. Which project should the company select and why? Project 1, because the annual cash flows are greater than those of Project 2 Project 1, because the present value of its cash inflows exceeds those of Project 2 by $14, 211, 62 Project 2, because the total cash inflows are $70,000 greater than those of Project 1 Project 2, because the present value of the cash inflows exceeds those of Project 1 by $18.598.33 It does not matter as both projects have almost identical present values
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