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Calculate the npv of investments a and b

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Reference no: EM133106806

Question - VOD Financials, LLC. has to make a choice between investments A and B which are mutually exclusive. Their costs of capital are both 9% per annum. Their respective two periods of cash inflows are as follows:

Cash Flows (£ thousands) Investment

Year 0

Year 1

Year 2

A

700

475

350

B

400

250

150

Required -

(i) Calculate the NPV of investments A and B based on the cost of capital rate.

 (ii) Calculate the IRR of investments A and B.

(iii) Compare the NPVs and IRRs of investments A and B. Using appropriate evaluations, decide which investment you would recommend to VOD Financials, LLC. Explain your answer.

Reference no: EM133106806

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