Project 1 requires an original investment of $80,000 The project will yield cash flows of $14,000 per year for eight years Project 2 has a calculated net present value of $5,000 over a five year life Project 1 could be sold at the end of five years for a price of $50,000 (a) Determine the net prese...

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Project 1 requires an original investment of $80,000. The project will yield cash flows of $14,000 per

Question:

Project 1 requires an original investment of $80,000. The project will yield cash flows of $14,000 per year for eight years. Project 2 has a calculated of $5,000 over a five-year life. Project 1 could be sold at the end of five years for a price of $50,000.
(a) Determine the of Project 1 over a five-year life with assuming a minimum rate of return of 10%.
(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... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important...