Question

Consider the cash flow data in the table below for two competing investment projects. At 15%, which of the two projects would be a better choice? E Click the icon to view the cash flows for the investment projects Click the icon to view the interest factors for discrete compounding when ,-15% per year The PW value for project A is $793. (Round to the nearest dollar.) 6 More Info Cash Flow Data (Unit: S thousand) Project A Project B - $1,300 - 1,000 - 495 975 975 1,495 1,845 805 805 485 820 - $3,100 - 790 870 880 1,190 1,700 1,520 960 710 340 1,090 10 Print Done

Answer 1

ANSWER:

Present worth has been found out in excel , due to inavailability of compounding factor table of i =15%

year	0	1	2	3	4	5	6	7	8	9	10
cash flows	-1300	-1000	-495	975	975	1495	1845	805	805	485	820
present worth	1101.949016

In excel we will use the =npv function to find the net present worth.

=npv(rate,cash flow from year 1 to year 10) + cash flow in year 0

=npv(15%,-1000,-495,975,975,1495,1845,805,805,485,820)+(-1300)

=1,101.94

so the present worth is equal to $1,102 (rounded of to the nearest dollar)