Justin Beaver (JB) is evaluating 2 investment options, project 1 (P1) or project 2 (P2), both giving the same amount of positive NPV. The following annual cash flows are expected, and JB expects 10% return from each investment. Each project requires an initial investment in Year 0, and JB has a limited investment fund.

Which project JB should choose and why?

Year 1 2 3

Question 10:

Cash Flow (P1) $6,000

6,000 6,000

Cash Flow (P2) $5,000

7,000 6,000