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Two projects, O and P, both require a $80,000 initial investment. The cash inflows are as follows: Project O: Year 1: $35,000 Year 2: $30,000
Two projects, O and P, both require a $80,000 initial investment. The cash inflows are as follows:
Project O:
- Year 1: $35,000
- Year 2: $30,000
- Year 3: $25,000
- Year 4: $20,000
Project P:
- Year 1: $25,000
- Year 2: $35,000
- Year 3: $30,000
- Year 4: $25,000
Requirements: a. Calculate the NPV for each project using a 9% discount rate. b. Find the IRR for both projects. c. Determine the discounted payback period for both projects. d. Analyze which project should be selected based on the NPV and IRR.
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