The Matterhorn Corporation is trying to choose between the following two mutuall

Question

The Matterhorn Corporation is trying to choose between the following two mutually exclusive design projects:

b. If the required return is 14 percent, what is the NPV for each project? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

I cant figure out the NPV, i have figured out the profitability index of each and i got 1.11 and 1.20. Any help would be greatly appreciated!

Year Cash Flow (I) Cash Flow (II) 0 –$ 80,000 –$ 38,000 1 31,000 13,000 2 40,000 27,500 3 46,000 19,500

Explanation / Answer

Project 1

Project 2

Year Cash Flow PVF at 14% Present Value 0 -80000 1 -80000 1 31000      0.8772 27192.98 2 40000      0.7695 30778.7 3 46000      0.6750 31048.69 NPV    9,020.37

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