5. Below is NPV profiles of two alternative investment projects. What investment projects should the company
choose if the company does not have any other information such as cost of capital? (12 Points)
NPV Profile
$800,000.00
$600,000.00
$400,000.00
$200,000.00
S-
0%
10%
20%
30%
40%
50%
$(200,000.00)
$(400,000.00)
$(600,000.00)
Year
AB
Cash Flow A
Cash Flow B
0
$ (1,000,000.00)
$ (800,000.00)
1
$ 650,000.00
$ 90,000.00
2
$ 350,000.00
$ 110,000.00
3
$ 300,000.00
$ 250,000.00
4
$ 200,000.00
$ 350,000.00
5
$ 100,000.00
$ 850,000.00