Suppose a company has two mutually exclusive projects, both of which are three years in length....

 

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Suppose a company has two mutually exclusive projects, both of which are three years in length. Project A has an initial outlay of $9,000 and has expected cash flows of $4,000 in year 1, $4,000 in year 2, and $6,000 in year 3. Project B has an initial outlay of $10,000 and has expected cash flows of $3,000 in year 1, $4,000 in year 2, and $4,000 in year 3. The required rate of return is 18% for projects at this company. What is the net present value for the best project? (Answer to the nearest dollar.) Suppose a company has two mutually exclusive projects, both of which are three years in length. Project A has an initial outlay of $9,000 and has expected cash flows of $4,000 in year 1, $4,000 in year 2, and $6,000 in year 3. Project B has an initial outlay of $10,000 and has expected cash flows of $3,000 in year 1, $4,000 in year 2, and $4,000 in year 3. The required rate of return is 18% for projects at this company. What is the net present value for the best project? (Answer to the nearest dollar.)

Answer rating: 100% (QA)

To determine the net present value NPV for each project and identify the best project we need to cal... View the full answer