Two investment projects which are mutually exclusive both require a $10,000,000 investment. Projected cash flows are provided in a table below. Given discount rate of
Two investment projects which are mutually exclusive both require a $10,000,000 investment. Projected cash flows are provided in a table below. Given discount rate of 12 percent, calculate the net present value and profitability index for each project.
| Year | Project A | Project B |
|---|---|---|
| 1 | $3,500,000 | $6,500,000 |
| 2 | 3,500,000 | 3,000,000 |
| 3 | 3,500,000 | 3,000,000 |
| 4 | 3,500,000 | 1,000,000 |
Step by Step Solution
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Solution NPV for Proj A NPVRateCF1CF2CF3CF4 CF0 ie NPVA NPV123500000...
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Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
13th Edition
9780470374948, 470423684, 470374942, 978-0470423684
