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Explain which project would approve and why

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Project Alpha requires an initial investment of $35,000 but is expected to generate revenues of $10,000, $27,000 and $19,000 for the first, second, and third years, respectively. The target rate of return is 12%. Since the cash inflows are uneven, the NPV formula is broken out by individual cash flows.
Project Beta also requires a $35,000 initial investment and will generate $27,000 per year for two years. The target rate remains 12%. Show the calculations.

Question 1: With your company's limited resources explain which project you would approve and why?

Reference no: EM132573097

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