This is a discussion question Essay Example | Topics and Well Written Essays - 250 words

This is a discussion question - Essay Example A is much higher which is 1.89 years than Project B which is 3.75 years but an investor would give least attention to this and would consider Net present value and will go for Project B which is $114.409 which in comparison to Project A ( $56.922 ) is much higher than Project A. If an investor is keen to go through the details except than just considering payback period so investor will look at the internal rate of return of both the project to decide further which should be greater than given interest rate. In this case, internal rate of return of both projects is greater than the given interest rate of 12%. Considering specifically, Project A have a higher percentage which is 26.72%, whereas Project Bs is 19.74%. But investor would again justify Project B because it is widely known in business market that big investment at low percentage has a higher turnover than a small investment at 100% profit return for example $1 at 100% profit will return $2, whereas $100,000 at 80% will return $180,000. This shows that low rate of return is better on huge investment which is again justifying project B with an investment of