a) Calculate the net present value for both projects. Answer to the nearest cent b) Find the internal rate of return for both projects. Answer as a percent to 2 decimals. c) Which of these projects you would choose to invest in and why?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Suppose you have $10,000 to invest in one of the following projects.
Project Alpha requires an initial outlay of $10.000 and yields $12,000 in two years'
time.
Project Beta requires an outlay of $1,000 and yields say in the year and $5,750 the
year after
The cost of funds available is 5% compounded annually. Using the above
information, answer the following questions:
a) Calculate the net present value for both projects. Answer to the nearest cent
b) Find the internal rate of return for both projects. Answer as a percent to
decimals.
c) Which of these projects you would choose to invest in and why?
Transcribed Image Text:Suppose you have $10,000 to invest in one of the following projects. Project Alpha requires an initial outlay of $10.000 and yields $12,000 in two years' time. Project Beta requires an outlay of $1,000 and yields say in the year and $5,750 the year after The cost of funds available is 5% compounded annually. Using the above information, answer the following questions: a) Calculate the net present value for both projects. Answer to the nearest cent b) Find the internal rate of return for both projects. Answer as a percent to decimals. c) Which of these projects you would choose to invest in and why?
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