Question

Consider the cash flow data in the Table below for two competing investment projects. At i 15 %, which of the two projects would be a better choice? Project A Project B EOY CF CF -$1,200 -$1,200.00 0 -$1,300 -$660.00 1 -$435 $820.00 2 $920.00 $975 $1280 $975 4 $1880 $1,475 5 $1,775 $1,600.00 6 $1775 $1880.00 7 $675 $780.00 8 $375 $380.00 9 $760 $950.00 10 Note: Do not use Excel, Use interest factors and show all calculations to receive credit!

Please don't use Excel

Please use formula equations to solve this one not a picture

Thanks!

Answer 1

Here is solution of your question. All the best

project F Dane , And - Calwlate NP. pv facto PVCFA 15 P OF CIK Yeault Project AC Boj B.13) S oy LÁ (442) BAX O _ 1-1200 -1300 1,001 -1200 - 1200 1-300 - 660 0,869 - 1129,21-573.5 1-435 10.156 6199 820 -338, 9 915 920 L: 0651 6940,6 1604.4 1280 975 0.512 733.16 5517 1880 1475 0.497 934.4 2 733,0 1775 1600 0,432: 1.96681691.2 1725 1880 0.375_1663. 705 1 675 780 2.327 220.9 255 4 375 380 0, 284_ 106.5 107.4 _101760 950... 0.247_L 181.71 2346 Wtal NPV 1590:56 2735.21 Cal wiate Pretit Index (pl) Profitabilip badet presjeck As It I NAV Jlnitial Invertmest L E I 1590.50/1200) _ 2 2.32 - Project B + (2735.2 /1200) 3.28 th - Not for NPV Calwlation will /1+ R) a légulit.s)' = 0.8691. (t.is)² = 0.156 31'1 (14.15) 0 - 0.657 & 1o en till die Ani Project- ů better choice, on Band of APV calwlation & profitability Index Can Project A Project B 1590,56 _ 2735.2 2.32 3.28 As NPV & PI of project B w more, so - select B project.