24
24.1
Consider the following two projects:
| |
Year 0 |
Year 1 |
Year 2 |
Year 3 |
| A |
-5000 |
2500 |
2500 |
2500 |
| B |
-2000 |
1000 |
-500 |
3000 |
- Assume that your opportunity cost of
capital is 12%. What are the NPVs of projects A & B
and which would you take if you could only take one?
Explain. (DO NOT just say, 'It has the higher NPV.' Tell
me what that means and why it is relevant). (2 pts)
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