Reference no: EM132314068
You are a project manager for MGT609 Construction Corporation. One day at your work, your boss asked you to provide an in-depth analysis of the two candidate projects (Project A and Project B), whether any of them would be worth implementing. He told you that your department has a budget up to $210,000 for the new project implementation and the unused money will not be carried over to the next year. The following was the information provided to you.
Project A B
Initial investment ($) 180,000 200,000
Required rate of return (%) 10 10
Revenue Year 1 35,000 35,000
Year 2 41,000 45,000
Year 3 46,000 55,000
Year 4 58,000 65,000
Year 5 58,500 65,000
To demonstrate that you are proficient in project selection, you reported back to your boss with the following information.
1. Calculate NPV for both projects
2. Your analysis of the results, suggestion and recommendation.