Question
4. Capital Budgeting: This question has five parts. Here you have to find Net Present Value (NPV) for the two projects. (Show all work.) (15
4. Capital Budgeting: This question has five parts. Here you have to find Net Present Value (NPV) for the two projects. (Show all work.) (15 points)
Expected Net Cash Flows | ||
Year | Project A | Project B |
0 | ($5,000) | ($5,000) |
1 | $700 | $750 |
2 | $1,000 | $1,250 |
3 | $3,250 | $3,000 |
4 | $3,500 | $3,250 |
______ 4a. If the opportunity cost of capital is 10%, what is the NPV of Project A (round to the nearest penny)?
______ 4b. If the opportunity cost of capital is 10%, what is the NPV of Project A (round to the nearest penny)?
4c. If you have a choice between Project A and Project B, which one would you choose and why?
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