You have the option to decide between two investment projects of equal risk which promise...
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Finance
You have the option to decide between two investment projects of equal risk which promise to return the following cash flows:
Year Project A Project B
0 $ (10,000) (8,000)
1 2,250 1,000
2 2,500 1,300
3 2,000 1,600
4 2,100 1,900
5 2,000 1,500
6 1,500 2,000
Project A requires an initial investment (at time 0) of $10,000. Project B requires an initial investment (at time 0) of $8,000. a.) Calculate the Net Present Value (NPV) and Internal Rate of Return (IRR) of both projects, assuming a 4.15% discount rate. Would you invest in either or both of these projects? If so, why? If not, why not? b.) Calculate the NPV and IRR of both projects given a change in discount rate to 2.75%. Would you invest in either or both of these projects? If so, why? If not, why not?
I need to put this into a Financial Model on Excel. Any help is greatly appreciated. Thank you.
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