- Investment Analysis - Net Present Value (NPV)

Kokilaben Dhirubhai Ambani Hospital is expecting Project A and B to generate the following cash flows.

(in 000s)

Givens Years 0 1 2 3 4 5

1. Initial Investment ($3,500)

2. Net Operating Cash Flows $2,500 $2,000 $1,500 $1,000 $600

For Project A

3.Net Operating Cash Flows $600 $1,000 $1,500 $2,000 $2,500

For Project B

1. Do a net present value (NPV) analysis using a cost of capital of 20% for both projects

2. At a 20% cost of capital, which project should be accepted? Explain