Question

Consider the cash flow data in the Table below for two competing investment projects. At j = 15 %, which of the two projects would be a better choice? Project A Project B ΕΟΥ CF CF -$1,200 -$1,200.00 -$1,300 -$660.00 -$435 $820.00 $975 $920.00 $1280 $975 $1880 $1,475 $1,775 $1,600.00 $1775 $1880.00 $675 $780.00 $380.00 $375 $760 $950.00 Note: Do not use Excel, Use interest factors and show all calculations to receive credit!

Note: Do not use Excel, Use interest factors and show all calculations to receive credit!

Answer 1

NPV (NET PRESENT VALUE) = PRESENT VALUE OF CASH INFLOW- PRESENT VALUE OF CASH OUTFLOW.

NPV OF PROJECT A= $1597.68
NPV OF PROJECT B= $2737.31

PROJECT B MUST BE SELECTED AS IT HAS THE HIGHEST NPV.

Cx 1.51- CMkrest actor) Year Pro Tect A Project A Pref ect B Pro jeet & discout Cash Ano diconted cagh Preno 0 -1200 -1200 1 -1200 -/200 5730 54 - 1300 - 660 1129. 619-92 - 328-86 2 435 ৪ 20 O-756 975 690.535 7 20 O.657 557-7 432-16 1280 o. 5+ 2 975 1 880 1475 1 34- 3 O-49 7 733.0 35 I775 1600 691. 2 O.43 2 766.8 1475 1880 O.376 66 -4 t06 88 780 675 O-32-7 2 55.06 220 425 375 380 0-284 107.92 to 6-5 950 234-65 8.2 D. 247 To tal 237-30 S To tals 15 97-68 J