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You work for the 3T company, which expects to earn at least 12 percent on its investments. You have to choose between two similar projects.
You work for the 3T company, which expects to earn at least 12 percent on its investments. You have to choose between two similar projects. Below is the cash flow information for each project. Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Omega Alpha Year Inflow Outflow Netflow Year Inflow Outflow Netflow YO 221,060 (221, 000) YO 213, 000 (213, 060) Y1 5,000 190, 060 (185, 000) Y1 4,000 170, 060 (166, 000) Y2 150,600 150,600 Y2 150,600 150, 600 Y3 220, 000 30,000 190,060 Y3 220,000 30,000 190, 000 Y4 203,000 203, 000 Y4 179, 000 179,000 Y5 205,000 34, 000 171, 600 Y5 205, 090 42,000 163, 000 Y6 197, 000 197, 060 Y6 197, 600 197,600 Y7 100, 600 30,060 70, 000 Y7 100, 600 30,000 70,000 Total 1, 080,600 505, 000 575,000 Total 1, 055,060 485,600 570,000 The NPV for Omega is The NPV for Alpha is The better project is Alpha
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