HealthGen is analyzing two projects with the following net cash flows. The company’s required return...
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HealthGen is analyzing two projects with the following net cash flows. The company’s required return is 7%. (PV of $1 = 0.935, PVIFA of $1 = 4.100, FV of $1 = 1.070, FVA of $1 = 4.845)
Year | Project M Cash Flow | Project N Cash Flow |
0 | $(1,100,000) | $(900,000) |
1 | $280,000 | $230,000 |
2 | $330,000 | $270,000 |
3 | $380,000 | $310,000 |
4 | $430,000 | $350,000 |
5 | $480,000 | $390,000 |
b. Calculate the net present value for each project. Which project should be chosen based on the net present value?
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