Question
Which project should D&A should pick? Project A: t 0 1 2 3 4 5 6 7 8 9 10 CF 10,000 -55,000 155,000 125,000
Which project should D&A should pick?
Project A:
| t | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| CF | 10,000 | -55,000 | 155,000 | 125,000 | 119,000 | 113,500 | 201,500 | 123,000 | -119,000 | 54,000 |
Project B:
| t | 0 | 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10 |
| CF | 95,000 | 112,000 | 155,000 | -125,000 | 119,000 | -153,000 | 255,000 | -113,000 | 139,000 | 39,000 |
The cost of capital (discount rate) for both projects is 7.89% /year. Based on the given information, please calculate the present value of the cash flow for both projects. Which project has a higher present value? Please show all MANUAL calculations NOT EXCEL.
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
Cost Benefit Analysis
Authors: Harry F. Campbell, Richard P.C. Brown
3rd Edition
1032320753, 9781032320755
