Question

Given the following cash flows for two mutually exclusive projects, and a required rate of return of 12%, which of the following statements is true? Year 0 1 Project A -580,000 290,000 290,000 150,000 150,000 2 3 Project B -580,000 130,000 130,000 230.000 230,000 230.000 115,000 4 5 6 O Both projects should be accepted because both have a positive NPV (and EAA). O Project B should be accepted because it has the highest EAA. O Project B should be accepted because it has the highest NPV. O Project A should be accepted because it has the highest EAA. O Project A should be accepted because it has the highest NPV.

Answer 1

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C w ENG 01:24 01-08-2020 66 34 Х E894 . A B C D E F G H J K - PROJECT A PROJECT B PV FACTOR AT PV OF CF YEAR CF CF 873 874 875 876 877 878 879 12.00% с PV OF CF PROJECT A A*C -580000.00 PROJECT B B*C A B 0 -580000 1 -580000 290000 1 130000 0.8929 258928.57 2 290000 231186.22 130000 230000 -580000.00 116071.43 103635.20 163709.46 146169.16 130508.18 3 150000 150000 106767.04 95327.71 4 0.7972 0.7118 0.6355 0.5674 0.5066 230000 880 881 882 883 5 230000 6 115000 58262.58 884 885 NPV PVIFA 112209.54 3.0373 [12%, 4 YEARS ] 36943.25 138356.00 4.1114 (12%, 6 YEARS ] 33651.74 (NPV/PVIFA] EAA 886 887 888 889 890 891 892 893 894 895 896 ANSWER PROJECT A SHOULD BE SELECTED BECAUSE IT HAS HIGHER EAA invest, EAA REPLACEMENTS IRRnpvbeta HPR GMAM EAC MACRS RELEVANT Ml-np-ir BETA LEVERED NPV CCA REPLACEMENT BOI... +