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Calculate the npv of projects a and b

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Two projects, A and B, provide the following cash flows over a period of six years. Which one of these projects will be selected on the basis of the payback period?

Year

0

1

2

3

4

5

6

A

-100

20

30

50

10

10

0

B

-100

10

20

30

40

70

80

Assuming that the cost of capital is 10%, calculate the NPV of projects A and B as defined in the part a. Assume a tax rate of 20%, calculate after tax NPV? If the two projects are mutually exclusive, which one will be preferred?

Reference no: EM133119920

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