Question
Project D has an economic life of 2 years, and its cash flows for years 0, 1, and 2 are -$115; $106; and $108, respectively.
Project D has an economic life of 2 years, and its cash flows for years 0, 1, and 2 are -$115; $106; and $108, respectively. In contrast, Project T has an economic life of 3 years, and its cash flows for years 0, 1, 2, and 3 are -$56; $57; $59; and $88, respectively. Clone each project to their least common multiple (LCM) year and find the unbiased NPV for each sequence of clones. What is the difference of the unbiased NPV of the two cloned projects? Assume an annual discount rate of 18%. Round the answer to the nearest dollar. (Acceptable error = $2) Note: Subtract the NPV of the cloned sequence of project D minus the NPV of the cloned sequence of project T
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