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You are a consultant with a private firm and you have been given data for two projects. Each of the projects. Each of the projects
You are a consultant with a private firm and you have been given data for two projects. Each of the projects. Each of the projects requires an initial capital outlay of: $2,000 and give rise to different patterns of net cash flows as follows:
PROJECT | YR 0 | YR 1 | YR 2 | YR 3 | YR 4 |
A | 2000 | 600 | 480 | 360 | 240 |
B | 2000 | 240 | 360 | 480 | 600 |
Required
The cost of capital is 13%. Evaluate this project using NPV and B/C investment criteria and give your recommendation/advice.
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