1. Electronic Kisko:

$300,000 investment

$75000 + or - $10,000 annual saving plus increased revenue

$0 salvage value

Dinig renovation:

$300,000 investment

$60,000 + or - $20,000 annual saving plus increased revenue

$150,000 +- $50,000 salvage value

In Excel, calculate the NPV at7% and IRR of the two investment alternatives shown below. Use RANDBETWEEN to embed randomness for the annual savings and salvage values, where appropriate. For example, $75,000$10,000 can be modeled as RANDBETWEEN(65000,85000).

2.What do you observe? Does the risk profile of the investments change your preferences for one investment over the other?