What is net present value and profitability index of project

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Reference no: EM132532891

Assume two projects with cash flows as follows:

Project A's                Cash Flows

Year 0                    -100,000

Year 1                      30,000

Year 2                      40,000

Year 3                     50,000

Year 4                     60,000

Project B's Cash Flows

Year 0                 -100,000

Year 1                   40,000

Year 2                   30,000

Year 3                   30,000

Year 4                  20,000

Question 1: Assuming a 10 percent cost of capital, what is the Net Present Value &Profitability Index of Projects A and B? Based on your answer, suggest whether which projects should be undertaken if both the projects are independent.

Reference no: EM132532891

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