You have the option of choosing between two projects that differ in their costs and revenues.The interest rate is 10%.
Project A: immediate cost of $100,000. This project would bring in $12,000 per year forever,starting at the end of the first year.
Project B: immediate cost of $60,000. This project would bring in $10,000 per year forever,starting at the end of the first year.
a) Calculate the net present value of project A.
b) Calculate the net present value of project B
c) Which project should you invest is?
d) At what interest rate would you be indifferent between projects A and B?