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Johnson Farm Implement is faced with two mutually exclusive projects, P and Q. The following are the data about the two projects. Project P Q
Johnson Farm Implement is faced with two mutually exclusive projects, P and Q. The following are the data about the two projects.
| Project | P | Q |
|---|---|---|
| Initial Investment | $40,000 | $50,000 |
| Project Life | 3 yeras | 3 years |
| Annual Cash Flow | $15,000 | $25,000 |
| Risk Adjusted Discount Rate | 10% | 14% |
Risk-Free Rate of Return 6% 6%
Evaluate the projects using risk-adjusted discount rates. (See Table above)
Which project do you recommend? (See Table above)
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