Investment 1 has the following :
Cost of capital 9.5pecent
Initial invest =950,000
Year 1 cash flow=300,000Year 2 cash flow =200,000Year 3cash flow =200,000
Year 4 cash flow 150,000Year 5 cash flow 150,000
Investment 2
Cost of Capital 2pecent
Initial Investment 950,000
Year1 cash flow,$400,000,Year 2 cash flow 400,000,Year 3cash flow 500,000
Year 4 150,000 Year 5 150,000
1) What is payback period for investment 1&2
2) What IS THE NET PRESENT VALUE OF iNVESTMENTS1&2
3) What is the internal rate of return for investment 1 and 2
4) Which investmet would you choose and why.
Would you choose a different option if the cost of capitol was 18 percent