rabahimeryem07

Difference between Production and Productivity

Next Gen Corporation is considering two investment opportunities. The company can choose either to invest in Project K or Project M. The expected annual free cash flows for each project are as follows: 

Year 

Cash flows (RM) 

Project K 

Project M 

0 

(7,000) 

(7,000) 

1 

1,800 

0 

2 

(2,500) 

0 

3 

1,800 

0 

4 

4,800 

0 

5 

3,800 

10 000  

If the required rate of return is 8%, calculate: 

1. calculate the payback period for each project.  
2. calculate the net present value for each project.      

based on the two investment techniques, which project should be accepted?