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PLEASE I NEED THE ANWSER NAW XZ Company is medium sized metal fabricator...

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Finance

PLEASE I NEED THE ANWSER NAW

XZ Company is medium sized metal fabricator that is currently contemplating two projects: Project A require an initial investment of $ 50,000, Project B require an initial investment of $ 55,000. Assume the NZ Company has a 10% cost of capital and the relevant cash flows for the two projects are presented in the table below:

Project

Project A

Project B

Initial Investment

60,000

65,000

Year

Operating Cash Flow

1

22000

35000

2

22000

18000

3

22000

16000

4

22000

16000

5

22000

16000

Require:

a) Calculate the NPV for Project A and B?

(10: Marks)

b) Based on your NPV findings in section (a) which project will you recommend for NZ Company? (5: Marks)

c) Based on your answer in section (b) justify your recommendation?

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