Suppose you can choose between the following projects. Calculate Net Present Value for each and make a decision concerning which is best. Assume the relevant interest rate is 5%.
I. A die cast machine that costs $1,000,000.00 and provides an income stream of $200,000.00 per year for six years.
II. A plastic molding machine that costs $1,000,000.00 and provides an income stream of $250,000.00 per year for five years.
Better project is:
Its NPV is: