Inatech is contemplating two different projects and decides to perform a financial analysis to determine which is more financially lucrative.Project A and B have the cash flows as shown and Inatech uses a required rate of return of 10% and an inflation rate of 4%.Compute the payback in years and the net present value for both projects and offer advice as to the best course of action.
Definitions:
Firm
An organization engaged in commercial, industrial, or professional activities, typically with the aim of earning a profit.
Long-Run Supply Curve
A graphical representation showing the relationship between the price of a good and the quantity supplied over a period when all factors of production can vary.
Output
Refers to the quantity of goods or services produced in a given time period by a firm or economy.
Short-Run Supply Curve
A graphical representation showing the relationship between the price of a good and the quantity supplied by producers in the short term, under fixed resources and technologies.
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