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Project A requires an original investment of $64,200. The project will yield cash flows of $18,200 per year for 4 years. Project B has a
Project A requires an original investment of $64,200. The project will yield cash flows of $18,200 per year for 4 years. Project B has a computed net present value of $2,830 over a 4-year life. Project A could be sold at the end of 4 years for a price of $19,400. Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 1 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 0.747 0.621 0.567 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: 6oo 100% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 2.673 2.487 2.402 4 3.465 3.170 3.037 3.791 3.605 Use the tables above. a. Determine the net present value of Project A over a 4-year life with salvage value assuming a minimum rate of return of 12%. Round your answer to two decimal places. b. Which project provides the greatest net present value
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