In: Finance
Axis Corp. is considering an investment in the best of two mutually exclusive projects. Project Kelvin involves an overhaul of the existing system; it will cost $52,500 and generate cash inflows of $10,000 per year for the next 3 years. Project Thompson involves replacement of the existing system; it will cost $265,000 and generate cash inflows of $55,000 per year for 6 years. Using a(n) 10.36% cost of capital, calculate each project's NPV, and make a recommendation based on your findings.