Determine the NPV for both projects using a cost of capital

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Reference no: EM133113260

Question - St. Rose Hospital expects Projects A and B to generate the following cash flows: Givens (in '000s)

Years

0

1

2

3

4

5

Initial investment

($4,500)

 

 

 

 

 

Net operating cash flows for Project A

 

$4,500

$3,500

$1,500

$700

$500

Net operating cash flows for Project B

 

$500

$700

$1,500

$3,500

$4,500

Required -

a. Determine the NPV for both projects using a cost of capital of 20 percent.

b. Determine the NPV for both projects using a cost of capital of 10 percent.

c. At a 10 percent cost of capital, which project should be accepted? At a 20 percent cost of capital, which project should be accepted? Explain.

Reference no: EM133113260

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