Question
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 $ 52,000 $ 67,000 1 32,000 31,000 2 27,000
| Consider the following cash flows on two mutually exclusive projects: |
| Year | Project A | Project B | ||
| 0 | $ | 52,000 | $ | 67,000 |
| 1 | 32,000 | 31,000 | ||
| 2 | 27,000 | 40,000 | ||
| 3 | 22,000 | 43,000 | ||
| The cash flows of project A are expressed in real terms, whereas those of project B are expressed in nominal terms. The appropriate nominal discount rate is 12 percent and the inflation rate is 3 percent. |
| Calculate the NPV for each project. (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)) |
| NPV | |
| Project A | $ |
| Project B | $ |
| Which project should you choose? | ||||
|
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Fundamentals Of Futures And Options Markets
Authors: Jonn C. Hull
8th International Edition
0133382850, 9780133382853
