Question

Project A requires an original investment of $ 22,500. The project will yield cash flows of $ 5,000 per year for nine years. Project B has a calculated net present value of $ 3,500 over a six-year life. Project A could be sold at the end of six years for a price of $ 12,000.
(a) Determine the net present value of Project A over a six-year life, with residual value, assuming a minimum rate of return of 12%.
(b) Which project provides the greatest net present value?



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  • CreatedJune 27, 2014
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