QUESTION 2 The CEO of Coca Cola has to decide whether to invest in project 1 or
ID: 1187178 • Letter: Q
Question
QUESTION 2
The CEO of Coca Cola has to decide whether to invest in project 1 or project 2. The projects have the following initial investments and net revenues
Assume that the discount rate is 14%, calculate NPV and PI of each project;
Which project would you recommend? Why?
Project 1
Project 2
Initial investment
$35,000
$45,000
Net revenue in 2014
$18,000
$22,000
Net revenue in 2015
$22,000
$25,000
Net revenue in 2016
$25,000
$30,000
Project 1
Project 2
Initial investment
$35,000
$45,000
Net revenue in 2014
$18,000
$22,000
Net revenue in 2015
$22,000
$25,000
Net revenue in 2016
$25,000
$30,000
Explanation / Answer
Please rate