Workshop 6B Essay

Evaluate budget

Evaluate the next case and choose which is the best project.

The manager of a hospital intends to compare two investment projects, in order to provide the same number of new medical services to the community. The initial investment of each project, as well as their respective cash flows are shown in the following table:

Project To B

Initial investment $600,000 $600,000

Flow year 1 $300,000 $100,000

Flow year 2 $300,000 $200,000

Flow year 3$100,000$300,000

Flow year 4$50,000$400,000

Flow year 5 $0$500,000

Which of the two is a better project for the recovery period?