Omega Enterprises is reviewing two potential projects. Both require an initial investment of JPY 5,000,000....
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Accounting
Omega Enterprises is reviewing two potential projects. Both require an initial investment of JPY 5,000,000. The expected cash inflows are as follows:
Year | Cash Flows (Project C) | Cash Flows (Project D) |
Initial Investment | (5,000,000) | (5,000,000) |
1 | 1,500,000 | 1,000,000 |
2 | 1,500,000 | 2,000,000 |
3 | 1,000,000 | 2,500,000 |
4 | 1,000,000 | 3,000,000 |
Requirements: a. Compute the payback period for both projects. b. Calculate the NPV for each project if the cost of capital is 6%. c. Which project should Omega Enterprises invest in based on the NPV criterion?
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