Question
stephens inc is considering investing in one of two mutually exclusive 4 year projects. project a requires equipment with a cost of $140000 and increases
stephens inc is considering investing in one of two mutually exclusive 4 year projects. project a requires equipment with a cost of $140000 and increases net income by $5000, $10000, $20000, $30000 in years 1-4. Project b required equipment cost of $200000 and increases cash flow by $70000 per year in years 1-4. both projects have a 4 year life with straight line depreciation.
1) what is the NPV of project A at a discount rate of 10%? the professor says it's $19,272 but on a ba ii plus im getting -91,673. what am i doing wrong? he's not clear on the explanation, he did a timeline and listed cashflows, but added 35000 to all the positive cash flows. please help with explanations in detail. thank you.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started