Question.

Suppose you are working a financial manager at one of the investment corporations, if there were two investment opportunities require the same size of the investments (250,000 $), and the level of risk is close, the cash flows for each project is shown in the following table:

Project 1

year Cash flow

1100,000

2175,000

3150,000

475,000

Project 2

year Cash flow

125,000

275,000

3150,000

4250,000

1. Calculate the net present value for each project?

2. Which project would you select? and why? (assume that the interest rate is 10%).