Net present valueunequal lives OBJ. 4 Project A requires an original investment of $32,600. The project will

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Net present value—unequal lives OBJ. 4 Project A requires an original investment of $32,600. The project will yield cash flows of $7,000 per year for nine years. Project B has a calculated net present value of $3,500 over a six-year life. Project A could be sold at the end of six years for a price of $15,000.

(a) Determine the net present value of Project A over a six-year life, with residual value, assuming a minimum rate of return of 12%.

(b) Which project provides the greatest net present value?

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Financial And Managerial Accounting

ISBN: 9781305267831,9781305267848

13th Edition

Authors: Carl S. Warren , James M. Reeve , Jonathan Duchac

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