Business, 15.06.2020 16:57 sadcase85

Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equipment. Each project will last 5 years and have no salvage value at the end. The company’s required rate of return for all investment projects is 9%. The cash flows of the projects are provided below. Project 1 Project 2 Cost $175, 000 $185 ,000 Future Cash Flows Year 1 Year 2 Year 3 Year 4 Year 5 76 ,000 83 ,000 67 ,000 65 ,000 55 ,000 87 ,000 78 ,000 69 ,000 65 ,000 57 ,000 Required: a) Identify which project should the company accept based on NPV method .(Note: Please round up the result of each calculation of PV to 2 decimal places only for simplification)
b) Identify which project should the company accept based on simple pay back method if the payback criteria is maximum 2 years .
c) Which project Giant Machinery should choose if two methods are in conflict .

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Giant Machinery Ltd is considering to invest in one of the two following Projects to buy a new equip...