Question
Eco-Friendly Solutions is considering an investment in either Project Eco or Project Green . Both projects require an initial investment of $800,000. The expected cash
Eco-Friendly Solutions is considering an investment in either Project Eco or Project Green. Both projects require an initial investment of $800,000. The expected cash inflows are:
Year | Project Eco | Project Green |
0 | -$800,000 | -$800,000 |
1 | $200,000 | $250,000 |
2 | $250,000 | $200,000 |
3 | $300,000 | $150,000 |
4 | $350,000 | $100,000 |
a. Calculate the payback period for each project. b. Using a discount rate of 10%, calculate the NPV for both projects and indicate which project is more desirable.
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Valuation The Art and Science of Corporate Investment Decisions
Authors: Sheridan Titman, John D. Martin
3rd edition
133479528, 978-0133479522
