Silver Lining Inc. is considering two projects. Project A requires an investment

Question

Silver Lining Inc. is considering two projects. Project A requires an investment of $41,000. Estimated annual receipts for 20 years are $25,000; estimated annual costs are $12,500. An alternative project, B, requires an investment of $80,000, has annual receipts for 20 years of $31,000, and has annual costs of $18,000. Assume both projects have a zero salvage value and that MARR is 10.0 percent/year. Projects are NOT mutually exclusive. What is the present worth of each project? Which project(s) should be chosen? Why?

Important: Please complete in Excel AND upload to https://www.file.io/
Hightlight answer. I will make sure to give instant postive feedback

Explanation / Answer

From above calculation Project A has NPV of $ 65420 & Project B $30676

Project A has higher NPV than project B which calls for Project A to be chosen over Project B. But it is mentioned in the question that both projects are NOT mutually exclusive, hence both has positive NPV and both can be chosen.

Note : I have prepared the excel file for NPV calculation, of which I have pasted the image above. I am not able to navigate to the link provided to upload the excel file. Let me know if excel fileis still required and provide me with proper link to upload, will upload the same.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

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