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Calculate the net present value of the two projects

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Reference no: EM132569918

Jim's Ltd has the following net cash flows for two projects.

Year                  Project A             Project B

1                      14,000              14,000

2                   10,000                  18,000

3                     19,000               27,000

4                     24,000                31,000

Initial investment (50,000)            (70,000)

The projects cost of capital is 11%

Required:

Question A. Calculate the net present value ( NPV) of the two projects and state which project would you recommend .

Question B. Would your answer in part 1 be different if you knew that in year 5 project A will have cash flows of $23,000 and project B $32,000.

Question C. Calculate the payback period for each project

Question D. Calculate the ARR for each project.

Reference no: EM132569918

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