Problem:
Evaluate 2 mutually exclusive project projects using DCF methods.
Cost of capital on both projects is 10%
Initial outlay for both projects is $100,000.
Both projects will be completed in 3 years.
Project A - will return $60,000 at the end of each of its first 2 years and then there will be no cash flow for its third year.
Project B - will return no cash flow for years one and two, and then it will generate $140,000. at the end of the third year.