Project 1 requires an original investment of $43,600. The project will yield cash flows of $12,000 per year for five years. Project 2 has a calculated net present value of $9,500 over a three-year life. Project 1 could be sold at the end of three years for a price of $47,000.

Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below.

Q) Determine the net present value of Project 1 over a three-year life with residual value, assuming a minimum rate of return of 20%. If required, round to the nearest dollar.

Present Value of $1 at Compound Interest Year123456789106%0.9430.8900.8400.7920.7470.7050.6650.6270.5920.55810%0.9090.8260.7510.6830.6210.5640.5130.4670.4240.38612%0.8930.7970.7120.6360.5670.5070.4520.4040.3610.32215%0.8700.7560.6580.5720.4970.4320.3760.3270.2840.24720%0.8330.6940.5790.4820.4020.3350.2790.2330.1940.162 Present Value of an Annuity of $1 at Compound Interest Year123456789106%0.9431.8332.6733.4654.2124.9175.5826.2106.8027.36010%0.9091.7362.4873.1703.7914.3554.8685.3355.7596.14512%0.8931.6902.4023.0373.6054.1114.5644.9685.3285.65015%0.8701.6262.2832.8553.3523.7844.1604.4874.7725.01920%0.8331.5282.1062.5892.9913.3263.6053.8374.0314.192