Question
DT consultancy is considering an investment of $100,000. The useful life of the project is 10 years. The cutoff period is three (3) years. The
DT consultancy is considering an investment of $100,000. The useful life of the project is 10 years. The cutoff period is three (3) years. The board of directors has identified two alternatives A and B. The expected annual cash flows are as follows:
Cost or Cash Flow | Alternative A | Alternative B |
Initial cost | ($100,000) | ($100,000) |
Cash flow year 1 | 35,000 | 35,000 |
Cash flow year 2 | 28,000 | 35,000 |
Cash flow year 3 | 32,000 | 35,000 |
Cash flow year 4 | 40,000 | 35,000 |
Q2. Suggest DT Consultancy which project is feasible to choose?(7 marks)
Q3. Mentions any three valid reasons for choosing the particular project (3 Marks)
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