Your company is considering to choose one of the two projects: Project Gold and Project Diamond. Each project will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9%. The cash flows of two projects are provided below.
|Cost||$485 000||$520 000|
|Future Cash Flows
| 117 050
- Identify which project should your company accept based on Net Present Value method?
- Identify which project should your company accept based on Discounted Payback Period method if the payback criterion is maximum 2.5 years?
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