IS Project Management

Help Andorra Hospital to make decision on which investment to make based on the different initial investment and annual cash inflows. Assume the return interest rate is 9%. The relevant information for net present value analysis is given below in Table 1. Table 1. Comparison of Projects Year Project 1 Project 2 Inital Investment RM275,000 RM250,000 Cash Inflows Cash Inflows 1 RM125,000 RM75,000 2 RM110,000 RM78,000 3 RM60,000 RM82,000 4 RM55,000 RM85,000 Total RM350,000 RM320,000 (a) Select the best investment using net present value (NPV) method. Show the calculation done. [11 marks] (b) Explain in your word, why Andorra Hospital should use NPV as one of the financial analysis method. [1 mark]