Question
In: Finance
Mangement is considering two hotel projects. Project A will be in Jamaica with an intial investment...
- 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;
- Calculate the discounted payback period of Project A
- Calculate the discounted payback period of Project
B.
- Calculate the net present value for Project A
- Calculate the net present value for Project B.
- Managemet can only accept one project. Which project should management accept? Explain your answer.
Solutions
Expert Solution
Net Present value = -$211,737.20
Answer to Part e.
Management should not accept any the project as both the project
has negative NPV and are having discounted payback period of 0
years
jeff jeffy answered 1 year agoRelated Solutions
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