Zellar\'s, Inc. Is considering two mutually exclusive projects, A and B. Project
ID: 2744396 • Letter: Z
Question
Zellar's, Inc. Is considering two mutually exclusive projects, A and B. Project A costs $ 75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellar, Inc.'s required rate of return for these projects is 10%. The net present value for project A is:A $5826 B.$6347 C.$9458 D.$18000 Zellar's, Inc. Is considering two mutually exclusive projects, A and B. Project A costs $ 75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellar, Inc.'s required rate of return for these projects is 10%. The net present value for project A is:
A $5826 B.$6347 C.$9458 D.$18000 Zellar's, Inc. Is considering two mutually exclusive projects, A and B. Project A costs $ 75,000 and is expected to generate $48,000 in year one and $45,000 in year two. Project B costs $80,000 and is expected to generate $34,000 on year one, $37,000 in year two, $26,000 in year three, and $25,000 in year four. Zellar, Inc.'s required rate of return for these projects is 10%. The net present value for project A is:
A $5826 B.$6347 C.$9458 D.$18000
Explanation / Answer
Year Cash flow PVF@10% Present value 0 $ (75,000) 1.000 $ (75,000) 1 $ 48,000 0.909 $ 43,636 2 $ 45,000 0.826 $ 37,190 Net present value $ 5,826
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