Question
Your Company has been offered the possibility of entering two projects: PROJECT A: A project that consists of an initial investment of 200.000 next year,
Your Company has been offered the possibility of entering two projects:
PROJECT A:
A project that consists of an initial investment of 200.000 next year, and then a set of 5 yearly revenues of 43.000 each, the first one of them to be received one year after the initial investment
PROJECT B:
A six-year scope project that consists of an initial investment of 100,000 now, and a set of 6 yearly revenues of 21.000 from year 1 to year 6.
If the cost of capital is 5%, which one would you choose and why? Does any of the above projects have a negative NPV? If so, what does it mean?
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