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Project A requires an original investment of $62,700. The project will yield cash flows of $18,600 per year for seven years. Project B has a
Project A requires an original investment of $62,700. The project will yield cash flows of $18,600 per year for seven years. Project B has a calculated net present value of $3,830 over a four-year life. Project A could be sold at the end of four years for a price of $15,000. Below is a table for the present value of $1 at Compound interest. Year 6% 10% 12% 0.943 0.909 0.890 0.826 0.751 0.840 0.792 0.893 0.797 0.712 0.636 0.567 0.683 0.747 0.621 Below is a table for the present value of an annuity of $1 at compound interest. Year 6% 10% 12% 0.943 0.909 0.893 1.736 1.690 1.833 2.673 2.487 2.402 3.465 3.170 3.037 3.605 4.212 3.791 Use the tables above. (a) Using the present value tables above, determine the net present value of Project A over a four-year life with salvage value assuming a minimum rate of return of 12%. Round your answer to two decimal places. Enter negative values as negative numbers. (b) Which project provides the greatest net present value
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