Question
Zebra Inc. is considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the
Zebra Inc. is considering the following two mutually exclusive projects. Both projects will be depreciated using straight-line depreciation to a zero book value over the life of the project. Neither project has any salvage value. Required return is 10 percent for Project A and 13 percent for Project B. Calculate the Net Present Value (NPV) of each project. Which one would Zebra choose? Why? Show your work!
|
| Project A |
| Project B |
| Year | Cash Flow | Year | Cash Flow |
| 0 | -$75,000 | 0 | -$70,000 |
| 1 | $19,000 | 1 | $10,000 |
| 2 | $48,000 | 2 | $16,000 |
| 3 | $12,000 | 3 | $72,000 |
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The International Handbook Of Public Financial Management
Authors: Richard Allen, Richard Hemming, B. Potter
1st Edition
1137574895, 978-1137574893
