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Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 $57,000 $72,000 1 37,000 36,000 2 32,000 45,000 3
Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 $57,000 $72,000 1 37,000 36,000 2 32,000 45,000 3 27,000 48,000 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 10 percent and the inflation rate is 2 percent. Calculate the NPV for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV Project A Project B Which project should you choose? Project B Project A
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