The following are the cash flows of two projects: Year Project A Project B 0 --
ID: 2743374 • Letter: T
Question
The following are the cash flows of two projects:
Year Project A Project B
0 -- $220 -- $220
1 100 120
2 100 120
3 100 120
4 100
a. Calculate the NPV for both projects if the discount rate is 10%. (Do not round intermediate calcualtions. Round your answers to 2 decimal places.)
Project NPV
A ______
B ______
b. Suppose that you can choose only one of these projects. Which would you choose?
Project A
Project B
Neither
Explanation / Answer
Statement showing Cash flows Project A Project B Particulars Time PVf@10% Amount PV Amount PV Cash Outflows - 1.00 (220.00) (220.00) (220.00) (220.00) PV of Cash outflows = PVCO (220.00) (220.00) Cash inflows 1.00 0.9091 100.00 90.91 120.00 109.09 Cash inflows 2.00 0.8264 100.00 82.64 120.00 99.17 Cash inflows 3.00 0.7513 100.00 75.13 120.00 90.16 Cash inflows 4.00 0.6830 100.00 68.30 - PV of Cash Inflows =PVCI 316.99 298.42 NPV= PVCI - PVCO 96.99 78.42 Project A since it has highest NPV
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.