Project One has monetary flows of -$100 now and +$115 in one year while Project

Question

Project One has monetary flows of -$100 now and +$115 in one year while Project Two has monetary flows of -$20 now and +$23 in one year. Which of the following are true? the present value of both projects is positive if the interest (or discount rate) is below 10%. the present value of project one is positive if the interest (or discount rate) is below 15%, and the present value of project two is positive if interest (or discount rate) is below 10% the present value of both projects is positive if the interest (or discount rate) is below 15%. the present value of project one is positive if the interest (or discount rate) is below 10%, and the present value of project two is positive if interest (or discount rate) is below 15%.

Explanation / Answer

The correct option is C : - The present value of both projects is positive if the interest rate is below 15% .

Project A Project B Interest rate Present value of cash flows Net present value Present value of cash flows Net present value 0.01 113.8614 13.86139 22.77228 2.772277 0.02 112.7451 12.7451 22.54902 2.54902 0.03 111.6505 11.65049 22.3301 2.330097 0.04 110.5769 10.57692 22.11538 2.115385 0.05 109.5238 9.52381 21.90476 1.904762 0.06 108.4906 8.490566 21.69811 1.698113 0.07 107.4766 7.476636 21.49533 1.495327 0.08 106.4815 6.481481 21.2963 1.296296 0.09 105.5046 5.504587 21.10092 1.100917 0.1 104.5455 4.545455 20.90909 0.909091 0.11 103.6036 3.603604 20.72072 0.720721 0.12 102.6786 2.678571 20.53571 0.535714 0.13 101.7699 1.769912 20.35398 0.353982 0.14 100.8772 0.877193 20.17544 0.175439 0.15 100 0 20 0

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.