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The table below presents data for two projects you are contemplating undertaking. These two projects perform the same essential purpose. They involve the acquisition of

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The table below presents data for two projects you are contemplating undertaking. These two projects perform the same essential purpose. They involve the acquisition of a special machine to make French Crpes, a very light and delicate pancake. Both projects require an initial investment of $85,000. The cash flows associated with these projects are given in the table below. Your required rate of return is 12% per annum. Year Project L ($) Project S ($) 11 30,000 35,000 35,000 40,000 3 50,000 55,000 2. 4 65,000 50,000 5 -40,000 30,000 16 40,000 10,000 7 -20,000 20,000 Question 12. Now assume that Project L and Project S do not perform the same function, meaning they are not perfect substitutes for each other. Would this change your decision? How? (no calculations are needed here) (2 marks)

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