QRS Ltd. is evaluating two projects, Project Ocean and Project River, requiring initial investments of...
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Accounting
QRS Ltd. is evaluating two projects, Project Ocean and Project River, requiring initial investments of SGD 250,000 each. The cash flows are:
Year | Cash Flows (Project Ocean) | Cash Flows (Project River) |
Initial Investment | (250,000) | (250,000) |
1 | 90,000 | 80,000 |
2 | 80,000 | 90,000 |
3 | 70,000 | 80,000 |
4 | 60,000 | 70,000 |
a. Determine the Net Present Value (NPV) for both projects assuming a discount rate of 6%.
b. Based on the NPV, which project should be undertaken?
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