LMN Ltd. is considering two projects, A and B. The cash flows are as follows:YearProject...
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- LMN Ltd. is considering two projects, A and B. The cash flows are as follows:
Year | Project A (USD) | Project B (USD) |
0 | (500,000) | (500,000) |
1 | 100,000 | 150,000 |
2 | 150,000 | 200,000 |
3 | 200,000 | 250,000 |
4 | 250,000 | 300,000 |
5 | 300,000 | 350,000 |
Requirements: a. Compute the payback period for both projects. b. Calculate the NPV for both projects at a discount rate of 6%. c. Based on NPV, which project should LMN Ltd. invest in?
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