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Treasury analysis year

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Reference no: EM132052570

Gold Corporation performed a treasury analysis this year and determined that it had $150,000 to invest into a new project this year. After much consideration, Gold narrowed down options to 2 mutually exclusive projects, A and B. Information on Projects A and B are below:

Project A                                       Project B

Initial investment                      $150,000 (fixed cost)                $150,000 (fixed cost)

Units to sell                                  5,000                                              8,500

Sales price per unit                   $100                                               $150

Variable costs per unit             $35                                                 $70

Project A will result in tax free income, while Project B's income will be taxed at 25%. Which project should Gold Corporation choose and why?

Reference no: EM132052570

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