Question

WACC = 2% Period Project 1 Project 2 0 -$150 -$60 1 $100 $50 2 $75...

WACC = 2%
Period Project 1 Project 2
0 -$150 -$60
1 $100 $50
2 $75 $35
3 $80
4
5
6

Based on the information in the table, what is the replacement chain NPV for Project 2?

Group of answer choices

$65.38

$22.66

$45.32

$78.45

0 0
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Answer #1

Calculation of replacement chain NPV of project 2

Period Particulars Cash Flow (a) Discounting Factor @ 2% (b) Present Value (c=a*b)
0 Investment -$60 1.00 -$60.00
1 Cash Inflow $50 0.9804 $49.02
2 Cash Inflow $35 0.9612 $33.64
NPV $22.66
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