Npv unequal lives grady enterprises is looking at two


NPV unequal lives. Grady Enterprises is looking at two project opportunities for a parcel of land the company currently owns. The first project is a? restaurant, and the second project is a sports facility. The projected cash flow of the restaurant is an initial cost of $1,400,000 with cash flows over the next six years of ?$230,000 ?(year one), ?$240,000 ?(year two), $330,000 ?(years three through? five), and ?$1,740,000 ?(year six), at which point Grady plans to sell the restaurant. The sports facility has the following cash? flows: initial cost of ?$2,400,000 with cash flows over the next four years of ?$410,000 ?(years one through? three) and $3,480,000 ?(year four), at which point Grady plans to sell the facility. If the appropriate discount rate for the restaurant is 10.5?% and the appropriate discount rate for the sports facility is 12.0?%, use the NPV to determine which project Grady should choose for the parcel of land. Adjust the NPV for unequal lives with the equivalent annual annuity. Does the decision? change?

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Financial Management: Npv unequal lives grady enterprises is looking at two
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