Question

Project A is opening a bakery at 10 Center Street. Project B is opening a specialty coffee shop at the same address. Both projects have unconventional cash flows, that is, both projects have positive and negative cash flows that occur following the initial investment. When trying to decide which project to accept, given sufficient funding to accept either project, you should rely most heavily on the _____ method of analysis.

Answer 1

The correct approach will be "NPV (Net present value)".

Step-by-step explanation:

NPV concessions as well as reduce all potential investment returns from the campaign.

⇒ NPV = Present value of cash inflows - Present value of cash outflows

While using the NPV methodology with the appropriate project cost, we can determine is not whether the project is reasonable. Unless the Net present value is positive, the venture can not be dismissed and rejected whether it is poor or negative.