REFeasibilty Ltd is an Australian real estate company.
The financial manager is currently analysing two projects and
evaluating the potential of the investment opportunity. The
estimated initial investment outlay and after-tax cash flows
(incremental) associated with each project are shown in the
following table:
Project A Project B
Initial investment ($40,000,000) ($25,000,000)
Year Cash inflows
1 $2,200,000 $1,687,500
2 $2,288,000 $88,000
3 $2,380,000 $1,860,000
4 $2,475,000 $1,953,000
5 $2,574,000 $2,051,000
6 $2,677,000 $2,154,000
7 $42,832,000 $29,183,000
Assume the required rate...