10.24 Draconian Measures, Inc., is evaluating two independent projects. The comp
ID: 2673750 • Letter: 1
Question
10.24 Draconian Measures, Inc., is evaluating two independent projects. The company uses a 13.8 percent discount rate for such projects. Cost and cash flows are shown in the table. What are the NPVs of the two projects?
Year
Project 1
Project 2
0
$(8,425,375)
$(11,368,000)
1
$3,225,997
$2,112,589
2
$1,775,882
$3,787,552
3
$1,375,112
$3,125,650
4
$1,176,558
$4,115,899
5
$1,212,645
$4,556,424
6
$1,582,156
7
$1,365,882
Please show all work, all formulas, all steps
Year
Project 1
Project 2
0
$(8,425,375)
$(11,368,000)
1
$3,225,997
$2,112,589
2
$1,775,882
$3,787,552
3
$1,375,112
$3,125,650
4
$1,176,558
$4,115,899
5
$1,212,645
$4,556,424
6
$1,582,156
7
$1,365,882
Explanation / Answer
for r =13.8
NPV1 = P/(1+r)^n
= -8,425,375 + 3,225,997/1.138 + 1,775,882/1.138^2 ... 1,365,882/1.138^7
this will be the present value ,
similarly calculate for anather project , plz do calculations by yourself will help in solving exams
plz rate lifesaver
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