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ANReeder
Feb 26, 2007, 06:07 PM
As a financial officer, you must determine which project your company should accept. The projects are mutually exclusive and the net present value (NPV) calculations for each take into account the project’s risk. Indicate which project (A or B) you would recommend and explain your reasons for this recommendation.


Project A Project B
NPV $3 million $2.5 million
Risk level very risky very safe
CaptainForest
Feb 28, 2007, 01:11 AM
Project B.

Yes, Project B is valued at $500,000 LESS than Project A….

However, Project B is a VERY SAFE bet vs. Project A that is VERY RISKY.

Go with a guaranteed 2.5 million or risk it all for only an extra 500,000?