Question
You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows: Year Project A Cash Flow Project B
You have been assigned the task of evaluating two mutually exclusive projects with the following projected cash flows:
| Year | Project A Cash Flow | Project B Cash Flow |
|
| 0 | $(110,000) | $(110,000) | |
| 1 | 40,000 | 0 | |
| 2 | 40,000 | 0 | |
| 3 | 40,000 | 0 | |
| 4 | 40,000 | 0 | |
| 5 | 40,000 | 240,000 |
If the appropriate discount rate on these projects is 8 percent, which would be chosen and why?
The NPV of Project A is $_____.
The NPV of Project A is $_____.
Which would be chosen and why?
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Managerial Accounting
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
13th Edition
978-0073379616, 73379611, 978-0697789938
