Question $3$:

Which of the following two projects $($A or B$)$ would you select $($assume only one can be undertaken$).$

HINT: Assume that the cashflows are earned at the end of the year.

Show your reasoning:

A

Capex required Year $0$

$12,000,000$

Annual Cash Flow

$2,900,000$

No of years of Cash Flow

$12$

Wacc

$18\%$

B

Capex required Year $0$

$24,000,000$

Annual Cash Flow

$5,200,000$

No of years of Cash Flow

$15$

Wacc