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breannaasmith1122
29.10.2019 •
Business
You are considering two mutually exclusive projects. both projects have an initial cost of $52,000. project a produces cash inflows of $25,300, $37,100, and $22,000 for years 1 through 3, respectively. project b produces cash inflows of $43,600, $19,800 and $10,400 for years 1 through 3, respectively. the required rate of return is 14.2 percent for project a and 13.9 percent for project b. which project should you accept and why?
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Ответ:
Project A is better than Project B because it has a bigger net present value.
Explanation:
Giving the following information:
Project A:
Io= -52,000
1= 25,300
2= 37,100
3= 22,000
Project B:
Io= -52,000
1= 43,600
2= 19,800
3= 10,400
The required rate of return is 14.2 percent for Project A and 13.9 percent for Project B.
We need to calculate the Net Present Value of each project.
NPV= -Io + ∑[Cf/(1+i)^n]
Project A:
NPV= - 52,000 + (25,300/1.142) + (37100/1.142^2) + (22000/1.142^3) = 13,372.95
Project B:
NPV= 8,579.62
Project A is better than Project B because it has a bigger net present value.
Ответ:
where do u come from ?
explanation: