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You are provided with the following data on two mutually exclusive projects. The cost of capital is 15%. I need to learn steps with BA
You are provided with the following data on two mutually exclusive projects. The cost of capital is 15%. I need to learn steps with BA ll plus calculator if needed.
Project 1 | Project 2 | |
Initial cash outflow | -$5,000 | -$1,000 |
Year 1 cash inflow | $5,000 | $1,000 |
Year 2 cash inflow | $2,500 | $ 850 |
NPV | $1,238 | $ 512 |
PI | 1.25 | 1.51 |
Which project should you accept? What is the problem that you should be concerned with in making this decision?
Project 1; the timing of cash flows | ||
Project 2; the timing of cash flows | ||
Project 1; project scale | ||
Project 2; project scale |
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