Reference no: EM131041775
You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. Below is the cash information for each project. Your analysts predict that inflation rate will be a stable 3 percent over the next 7 years. Which of the two projects would you fund if the decision is based only on financial information? Why? Omega Alpha Year Inflow Outflow Netflow Year Inflow Outflow Netflow Y0 0 $225,000 2225,000 Y0 0 $300,000 2300,000 Y1 0190,0002190,000Y1$50,000100,000250,000 Y2 $150,000 0 150,000 Y2 150,000 0 150,000 Y3 220,000 30,000 190,000 Y3 250,000 50,000 200,000 Y4 215,000 0 215,000 Y4 250,000 0 250,000 Y5 205,000 30,000 175,000 Y5 200,000 50,000 150,000 Y6 197,000 0 197,000 Y6 180,000 0 180,000 Y7 100,000 30,000 70,000 Y7 120,000 30,000 90,000 Total 1,087,000 505,000 582,000 Total 1,200,000 530,000 670,000
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