Score: 0 of 1 pt 10of13 (7 complete) HW Score: 34.62%, 4.5 of 13 pts Problem 5-3

Question

Score: 0 of 1 pt 10of13 (7 complete) HW Score: 34.62%, 4.5 of 13 pts Problem 5-39 (algorithmic) Question Help * Consider the cash flow data in the table below for two competing investment projects At 1-14%, which of the two projects would be a better cho Click the icon to view the cash flows for the investment projects More Info Click the icon to vie w the interest factors for discrete compounding when i= 14% per year The Pw value for project A is (Round to the nearest dollar.) Cash Flow Data (Unit: S thousand) Project A Project B -$1,300 -1,000 - 425 905 905 1,455 1.735 575 575 435 850 $3,800 -800 750 910 1,330 1,910 1,540 800 770 320 1,040 Enter your answer in the answer box and then click Check Answer Print Done parts

Explanation / Answer

PW of project A is computed as follows.

Period (n) Cash Flow ($) PV Factor @14% Discounted Cash Flow ($) (A) (B) (A) x (B) 0 -13,00,000 1.0000 -13,00,000 1 -10,00,000 0.8772 -8,77,193 2 -4,25,000 0.7695 -3,27,024 3 9,05,000 0.6750 6,10,849 4 9,05,000 0.5921 5,35,833 5 14,65,000 0.5194 7,60,875 6 17,35,000 0.4556 7,90,443 7 5,75,000 0.3996 2,29,791 8 5,75,000 0.3506 2,01,571 9 4,35,000 0.3075 1,33,766 10 8,50,000 0.2697 2,29,282 PW ($) = 988,194

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