Question
GHI Corporation has two potential projects, Project Eagle and Project Hawk, with initial investments of JPY 120,000 each. The estimated after-tax cash flows are: Year
GHI Corporation has two potential projects, Project Eagle and Project Hawk, with initial investments of JPY 120,000 each. The estimated after-tax cash flows are:
Year | Cash Flows (Project Eagle) | Cash Flows (Project Hawk) |
Initial Investment | (120,000) | (120,000) |
1 | 40,000 | 35,000 |
2 | 35,000 | 40,000 |
3 | 30,000 | 35,000 |
4 | 25,000 | 30,000 |
a. Calculate the Net Present Value (NPV) for both projects using a discount rate of 5%.
b. Based on the NPV, which project is more viable?
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Financial Accounting
Authors: Robert Libby, Patricia Libby, Frank Hodge
9th edition
290-1259222138, 1259222136, 978-1259222139
