Respuesta :
The best rational decision is to invest in project Beta, since NPV Beta > NPV Alpha
What is the best rational decision?
Net present value is the present value of after-tax cash flows from an investment less the amount invested. Only projects with a positive NPV should be accepted. A project with a negative NPV should not be chosen because it isn't profitable.
When choosing between positive NPV projects, choose the project with the higher NPV first because it is more profitable.
NPV can be calculated using a financial calculator
NPV calculation for project alpha:
Cash flow in year 0 = -79
Cash flow in year 1 = 20
Cash flow in year 2 = 25
Cash flow in year 3 = 30
Cash flow in year 4 = 35
Cash flow in year 5 = 40
I = 17 %
NPV =$12.01
NPV calculation for project beta:
Cash flow in year 0 = -80
Cash flow from year 1 to 7 = 25
I = 14%
NPV = 27.21
To learn more about net present value, please check: https://brainly.com/question/25748668
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