Invest in two years in project with the cash flows

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Reference no: EM131916438

You have the option to either invest now or invest in two years in a project with the following cash flows

Time 0 1 2 3 4 5 6

Now -25 4 6 10 5 8 9

In two years -30 10 10 10 10

If the cost of capital is 8 percent

Invest now because NPV is higher

Invest in 2 years

Neither

Invest now because NPV of waiting is negative

Reference no: EM131916438

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