![Q3 (6 Marks) [CLO 1] The investors make decision to select appropriate investment project by using the concept of present value. If you have 2 investment projects with the same costs as the following: First: Total revenue at the end of every year is $3000 and the interest rate 5%. Second: Total revenue at the end of every year is $3300 and the interest rate 15%. Evaluate the two investment projects through 2 years and decide which project is better to select.](http://img.homeworklib.com/questions/5a01ce20-70b5-11ea-9faa-7908cf02370d.png?x-oss-process=image/resize,w_560)
Homework Answers
Assuming same costs we can find NPV on excel sheet atvend of two years and results been computed below
NPV project 1= 583.33 dollars
NPV project 2= 219.14 dollars
Hence Project 1 has higher Net present value and must be selected ahead of Project 2.
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