Question
The project has the following cash flows and salvage values and cost of capital 8%: Year Cash flows Salvage 0 -5000 4000 1 2500 3500
The project has the following cash flows and salvage values and cost of capital 8%:
| Year | Cash flows | Salvage |
| 0 | -5000 | 4000 |
| 1 | 2500 | 3500 |
| 2 | 3200 | 1800 |
| 3 | 1600 | 900 |
| 4 | 1000 | 0 |
What are the physical life and the economic life for this project?
A. Physical life of this project is 3 years with economic life of 4 years. B. Physical life of this project is 4 years with economic life of 1 year. C. Physical life of this project is 4 years with economic life of 2 years. D. Physical life of this project is 4 years with economic life of 4 years. E. Physical life of this project is 4 years with economic life of 3 years.
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Corporate Finance Principles And Practice
Authors: Denzil Watson, Tony Head
1st Edition
0273630083, 978-0273630081
