Question
Consider following investment alternatives: I- Project A requires to invest $5.000.000 (five million USD) today. It generates revenues like 8000.000 $ for first year, $7.000.000
Consider following investment alternatives:\ I- Project A requires to invest $5.000.000 (five million USD) today. It generates revenues like 8000.000 $ for first year, $7.000.000 for second vear.0.000 Fo for third year. It also requires annual cost like $3.000.000 for first year, $2.000.000 for second year, $1.000.000 for third year.\ Project B requires to invest $10.000.000 (ten million USD) toy. It generates revenues like $15.000.000 for first year, $14.000.000 for second year; $13.000.000 for third year. It also requires annual cost like $5.000.000 for first year, $4.000.000 for second year, $3.000.000\ for third year.\ We have end of the period convention for payments. Market interest rate is 10%. Which project alternative is better? Explain your reason with values?
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