Management of Draconian Measures, Inc., is evaluating two independent projects. The company uses a 13.8 percent discount

Question:

Management of Draconian Measures, Inc., is evaluating two independent projects. The company uses a 13.8 percent discount rate for such projects. The costs and cash flows for the projects are shown in the following table. What are their NPVs?

Year Project 1 Project 2 -$8,425,375 -$11,368,000 3,225,997 2,112,589 3,787,552 1,775,882 1,375,112 3,125,650 3 4 1,176,

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...

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