Project 1 requires an original investment of $10,000 The project will yield cash flows of $3,000 per year for seven years Project 2 has a calculated net present value of $2,500 over a four year life Project 1 could be sold at the end of four years for a price of $9,000 (a) Determine the net present...

a b Project 2 provides highest net present value Project 1s net present va ...

Project 1 requires an original investment of $10,000. The project will yield cash flows of $3,000 per

Question:

Project 1 requires an original investment of $10,000. The project will yield cash flows of $3,000 per year for seven years. Project 2 has a calculated of $2,500 over a four-year life. Project 1 could be sold at the end of four years for a price of $9,000.
(a) Determine the of Project 1 over a four-year life with residual value, assuming a minimum rate of return of 20%.
(b) Which project provides the greatest ?

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at...