Question
Two projects are considered: A and B. The first project (A) requires an investment of 30,000$ now (today). In return, the investor will receive five
Two projects are considered: A and B. The first project (A) requires an investment of 30,000$ now (today). In return, the investor will receive five annual payments of 8500, the first of which will be done one year after the investment. The second project (B) also requires an investment of 30,000$ now (today). In return, the investor will be paid 20000 one year after the investment. and another 25 000 two years after the investment. a) If you need to choose on investing between these two projects, which methods/indicators can help you to determine the best project? b) Calculate the net present value for project B if the annual interest rate is 3%. Would you rate project B as profitable? c) Calculate IRR for project B. d) Calculate NPV and IRR by using Excel. e) Determine the interest rate for which these two projects have the same NPV..
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