Reference no: EM132545611

You are considering two independent projects, Project A and Project B. The initial cash outlay associated with Project A is $50,000 and the initial cash outlay associated with Project B is $70,000. The discount rate on both projects is 12 percent. The expected annual cash flows from each project are as follows:

Year       Project A                 Project B

0             $(50,000) %             (70,000)

1           12,000                           13,000

2           12,000                         13,000

3               12,000                    13,000

4                 12,000                  13,000

5                12,000                13,000

6                 12,000              13,000

Question 1: Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted or not.

Question 2: Discuss the differences between the three values you found - compare and contrast these three methods.