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Question One ( 1 Mark ) Consider the following cash inflows and outflows related to project A and project B. CASH INFLOWS AND OUTFLOWS (IN
Question One ( 1 Mark ) Consider the following cash inflows and outflows related to project A and project B. CASH INFLOWS AND OUTFLOWS (IN $ 1,000) Year 1 Year 2 Project A Benefits $60 $120 $40 $20 Year 3 $55 $30 Year 4 $40 $20 Year 5 $40 $15 Year 6 $60 $25 Costs Project B Benefits Year 1 $65 $137 Year 2 $90 $45 Year 3 $44 $22 Year 4 $40 $20 Year 5 $20 $8 Year 6 $20 $7 Costs For each project, a. Calculate the cash flow. (0.25 Mark) b. Calculate the NPV assuming 15% discount rate, and determine which of the two projects would you prefer? Justify your answer. (0.75 Mark)
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