Evaluating two capital investments

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Reference no: EM13766247

Better Health Inc. is evaluating two capital investments, each of which requires an up-front (Year 0) expenditure of $1.5 million. The projects are expected to produce the following net cash inflows:

Year Project A Project B

1 $ 500,000 $ 2,000,000

2 1,000,000 1,000,000

3 2,000,000 600,000

a) What is each project IRR?

b) What is each project's NPV if the opportunity cost of capital is 10%?

Also, please calculate the payback period for both projects. Then, explain which project you would choose and why.

Reference no: EM13766247

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