Homework
A large retail company wants to determine which investment project it should invest in. Since you are the vice president of the company, you have been asked to analyze these two projects and report back to the board of directors regarding which of these two projects the company should undertake. Project A has an initial investment cost of $42,000. This project is expected to produce $9,450 in net cash flows each year for 7 years. Project B has an initial investment cost of $36,750 with an expected net cash flow of $7,875 per year for 5 years. Both investments have a 10% cost of capital.
1. What is each project's NPV?
2. What is each project's IRR?
3. What is the payback period for each project?
4. Which investment project do you recommend for your company? Be sure to explain why you arrived at the decision that you did.
Format your homework according to the give formatting requirements:
1. The answer must be double spaced, typed, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also includes a cover page containing the title of the homework, the course title, the student's name, and the date. The cover page is not included in the required page length.
3. Also include a reference page. The references and Citations should follow APA format. The reference page is not included in the required page length.