Wriston Company has $295,000 to invest. The company is trying to decide between
ID: 2380895 • Letter: W
Question
Wriston Company has $295,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are as follows:
The working capital needed for project B will be released for investment elsewhere at the end of nine years. Wriston Company uses a 11% discount rate. (Ignore income taxes.)
Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables.
Calculate net present value for each project. (Negative amounts should be indicated by a minus sign.Leave no cells blank - be certain to enter "0" wherever required. Round discount factor(s) to 3 decimal places, other intermediate calculations and final answers to the nearest whole dollar.)
Plz give me the net present value of project A and B
Wriston Company has $295,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are as follows:
Wriston Company has $295,000 to invest. The company is trying to decide between two alternative uses of the funds. The alternatives are as follows: The working capital needed for project B will be released for investment elsewhere at the end of nine years. Wriston Company uses a 11% discount rate. (Ignore income taxes.) Click here to view Exhibit 11B-1 and Exhibit 11B-2, to determine the appropriate discount factor(s) using tables. Calculate net present value for each project. (Negative amounts should be indicated by a minus sign.Leave no cells blank - be certain to enter "0" wherever required. Round discount factor(s) to 3 decimal places, other intermediate calculations and final answers to the nearest whole dollar.)Explanation / Answer
NPV OF PROJECT A = 50000*PVIFA(11%,9) + 10000PVIF(11%,9) - 295000
= 50000*5.537 + 10000*0.391-295000
= - $14240
NPV OF PROJECT A = 45000*PVIFA(11%,9) + 295000PVIF(11%,9) - 295000
= 45000*5.537 + 295000*0.391-295000
= $ 69510
ANSWER:
Net Present Value Project A $ (14240) Project B $ 69510
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