Below question is from Oliver Lehmann,
Kindly I need support how to calculate it.
A company has to make a choice between two projects, because the available resources in money and kind are not suffihow cient to run both at the same time. Each project would take 9 months and would cost $250,000.1.The first project is a process optimization which would result in a cost reduction of $120,000 per year. This benefit would be achieved immediately after the end of the project.
2.The second project would be the development of a new product which could produce the following net profits after the end of the project:
Assumed is a discount rate of 5% per year. Looking at the present values of the benefits of these projects in the first 3 years, what is true?
Both projects are equally attractive.
The first project is more attractive by app. 7%.
The second project is more attractive by app. 5%.
The first project is more attractive by app. 3%
The administrator has disabled public write access.
Moderators: Yolanda Mabutas, Ahmed Amin, Scott Gillard, Michael DeCicco, Rahul Kakkar, Fernando Jr Sinlao Lim, Mary Kathrine Padua, Chris Preziotti, Lazard Toe, ITBMC, MPM, CIPM, PMP, ITIL, Christian Winter, Kevin Nason, Michael Sumaquial, PMP, Mark Wuenscher, PMP