Question
Project A Year Year 1 Year 2 Year 3 Project B 120,000 43,000 45,000 60,000 Required Return 7 % 7 % You are evaluating 2
Project A Year Year 1 Year 2 Year 3 Project B 120,000 43,000 45,000 60,000 Required Return 7 % 7 % You are evaluating 2 investment options , Project A or Project B , both giving the same amount of positive NPV . The above annual cash flows are expected for project A. For project B , equal amount of annual cash inflows ( $ ) is expected over 3 years . You expect 7 % return from investment of this risk for both projects . Each project requires an initial amount investment in Year 0. Since you have a limited investment fund available , you can only choose one project ( a ) What is the minimum annual cash flow required to accept Project B ? ( b ) Assuming the initial investment for Project A in Year 0 was $ 120,000 . What would be the internal rate of return for project A? you decided to invest in project A. What could be the reason ?please Explain
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