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Q2) As a member in the project selection team of a company, you are required to analyze the following two projects using NPV (Net Present
Q2) As a member in the project selection team of a company, you are required to analyze the following two projects using NPV (Net Present Value) and ROI (Return on investment). Details of the two projects are shown as in Tables 1 and 2: Project A Year 1 Year 2 Year 3 Year 4 Benefits $0 $2,000 $3,000 $4,000 Costs $3,000 $2,000 $1,000 $1,000 Table 1 Project B Year 1 Year 2 Year 3 Year 4 Benefits $1,000 $2,000 $4,000 $4,000 Costs $2,000 $2,000 $2,000 $2,000 Table 2 (a) Assume that the discount rate is 10% and the discount cost start in Year 1. Calculate the NPV for both Project A and Project B. Based on (a), which project do you recommend? Discuss the advantages and disadvantages of using NPV Find ROI in selecting project. (b) (c)
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