Question 1

1. A company is deciding among two mutually exclusive projects. Project As initial cost is $40,000, and Project Bs initial cost is 30,000. The two projects have the following cash flows:

   Project A Project B

   Year Cash Flow Cash Flow

   1 10,000 8,000

   2 15,000 12,000

   3 20,000 20,000

   4 20,000 15,000

   The company's weighted average cost of capital is 11 percent. What is the net present value (NPV) of the project A?

   	1.	8,982
   	2.	7,090
   	3.	7,450
   	4.	8,630
   	5.	9,155