Reference no: EM132503953
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
1 $316,000 $200,000
2 $350,000 $200,000
3 ($20,000) ($15,000)
4 $280,000 390,000
The cost of capital for Project A is 13% and the cost of capital for project B is 15%.
Calculate the following;
a) Calculate the discounted payback period of Project A.
b) Calculate the discounted payback period of Project B.
c) Calculate the net present value for Project A.
d) Calculate the net present value for Project B.
e) Management can only accept one project. Which project should management accept? Explain your answer.
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: 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.
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