You are the senior manager at the Poeing Aircraft and have been authorized to spend up to $200,000 for projects. The two projects you are considering have the following characteristics:
Project A: Initial investment of $100,000. Cash flow of $100,000 at year 1 and $100,000 at year 2. This is a market expansion project, where the required rate of return is 20 percent.
Project B : Initial investment of $200,000. Cash flow of $200,000 at year 1 and $111,000 at year 2. This is a new product development project, where the required rate of return is 20 percent.
Assume the corporate discount rate is 10 percent. Please offer your recommendation, backed by your analysis of payback period, IRR, PI, NPV.