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DO NOT ANSWER IN EXCEL Mangement is considering two hotel projects. Project A will be in...

DO NOT ANSWER IN EXCEL

  1. Mangement is considering two hotel projects. Project A will be in Jamaica with an intial investment of $865,000 and Project B will be in Canada with an initial investment of $750,000

Years    

Project A  

Project B

Year 1 CashFlow

                          316,000.00

   200,000.00

Year 2 CashFlow

                          350,000.00

   200,000.00

Year 3 CashFlow

                          (20,000.00)

   (15,000.00)

Year 4 CashFlow

                          280,000.00

   390,000.00

The cost of capital for Project A is 13% and the cost of capital for project B is 15%.
Calculate the following;

  1. Calculate the discounted payback period of Project A
  2. Calculate the discounted payback period of Project B.
  3. Calculate the net present value for Project A
  4. Calculate the net present value for Project B.
  1. Management can only accept one project. Which project should management accept? Explain your answer

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