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You are deciding to choose between two mutually exclusive projects. a. option1: project X will cost $6,000 to install and $3200 a to run year
You are deciding to choose between two mutually exclusive projects.
a. option1: project X will cost $6,000 to install and $3200 a to run year and will last for three years.
b. option 2: project Y will cost $7,000 to install and $2700 a to run year and will last for four years.
Let the WACC = 0.08
Estimate the NPV of project X.
Answer for part 1
Estimate the Equivalent annuity cost of project X.
Answer for part 2
Estimate the NPV of project Y.
Answer for part 3
Estimate the Equivalent annuity cost of project Y.
Answer for part 4
Which option would you choose option 1 or 2?
Answer for part 5
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