eck Engineering normally expects a minimum rate of return of 12% on investments. Two projects are available but only one can be chosen. Project A requires an immediate investment of $4,000,000. In return revenue payments of $4,000,000 will be received after 4 years and $9,000,000 after nine years. Project B requires an investment of,$4,000,000 now and another $2,000,000 at the start of the third year. In return revenue payments will be received in the amount of $1,500,000 per year for nine years.

Calculate the NPV of both projects. (6 Marks)

• Calculate the ROI of both projects. (4 Marks)
• Determine the payback period of both projects. (2 Marks)
• Which project would you choose? Why? (3 Marks)