Problem
Considering there are no budget constraints. You are given information on the following two projects:
Project A: It has an initial investment of 10,000. Then cash flows for the subsequent 4 years are 5,000; 6,000; 7,000; and 8,000.
Project B: It has an initial investment of 1,000. Then cash flows for the subsequent 4 years are 900, 800, 700, and 600.
Existing cost of capital is 10%.
If the projects are mutually exclusive, which project(s) will you pick?