Question
Please answer Parts B and C fully with equations and excel formulas shown. Expected Net Cash Flows Year Project T Project F 0 -100,000 -100,000
Please answer Parts B and C fully with equations and excel formulas shown.
| Expected Net Cash Flows | ||
| Year | Project T | Project F |
| 0 | -100,000 | -100,000 |
| 1 | 75,000 | 40,000 |
| 2 | 65,000 | 42,000 |
| 3 | -- | 44,000 |
| 4 | -- | 46,000 |
The projects provide a necessary service, so whichever one is selected is expected to be repeated into the foreseeable future. Both projects have a 12% cost of capital.
a. What is each projects initial NPV without replication?
| Project T NPV | $18,781.89 |
| Project F NPV | $29,748.59 |
b. What is each projects equivalent annual annuity?
c. Suppose you replicate Project T so that it has the same life as Project F. Which project would you choose?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Make Money Like A Monster 4 Retirement
Authors: Kaiju Cash
1st Edition
979-8853287549
