Answered

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You are evaluating two projects. You may accept only one of them. Project one will cost $379,000 initially and will pay $134,000 each year for the next 5 years. Project two will cost $454,000 initially, but will pay $101,000 for the next 10 years. The firm's cost of capital is 15%. Compute the NPV of each project. Which project has the highest NPV and by how much? Round your answers to the nearest dollar.
Group of answer choices

Project 1 has a higher NPV by $37,636.

Project 2 has a higher NPV by $37,636.

Project 2 has a higher NPV by $17,293.

Project 1 has a higher NPV by $17,293.

The two projects have equal NPV.

Sagot :

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