Score: 0.17 of 1 pt 3 of 11(3 complete) HW Score: 6.82%, 0.75 of 1 & Problem 9.L

Question

Score: 0.17 of 1 pt 3 of 11(3 complete) HW Score: 6.82%, 0.75 of 1 & Problem 9.LO3.30 (similar to) Question Help Calculate the (a) net present value (NPV), (b) proftability index (Pl), and (c) internal rate of retun (IRR) for Projects 1 and 2 (cash fiows shown below), assuming a required return of 12%. Year 0 Project 1 -$410 $170 $190 $190 $330 Project 2 -$400 $160 $120 $190 $300 a. What is the NPV of Project 1? $ 238.21 (Round to the nearest cent.) What is the NPV of Project 2? (Round to the nearest cent)

Explanation / Answer

As per policy, only one question is allowed to answer at a time, so answering Q1:

Prob 9.LO3.30 : Year CF project 1 CF project 2 Discount 12% PV project 1 PV project 2 0 -470 -400 1 -470 -400 1 170 160 0.893 151.81 142.88 2 190 120 0.797 151.43 95.64 3 190 190 0.712 135.28 135.28 4 330 300 0.636 209.88 190.8 NPV= 178.4 164.6 NPV of project 1 = $178.4 NPV of project 2 = $164.60

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