1. We are investing in a project, but are not sure, which one to choose. The one costs $9 million has net cash flows of $2 million annually and lasts for 7 years. The other costs $14 million and has net cash flows of $3 million annually and lasts the same period of time. The COC is 12%. Which one should we invest in among the two, since we only can afford $14 million? We are told by our boss that we have to use the IRR to do the analysis.

USE IRR