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Pedro Spier, the president of Spler Enterprises, is considering two Investment opportunities. Because of limited resources, h
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Answer #1

a1. Net Present Value = Present value of annual saving - initial investment

NPV of Project A = 41086*Cumulative PVF @6%, 3 years - 104000

= $41086*2.673 - 104000 = $5822.88

NPV of Project B = 18095*Cumulative PVF @6%, 3 years - 45000

= $18095*2.673 - 45000 = $3367.94

a2. Project A.

b1.. IRR = Initial Investment / Annual cash inflow = Found the value in the Cumulative present value factor in the relevant year

Project A = 104000 / 41086 = 2.531 = 9%

Project B = 45000 / 18095 = 2.487 = 10%

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