Question: 2. Given the following cash flows for Projects A & B, answer questions 2a. - 2c. Discount rate = 10% 0 Cash Cash Year flow

2. Given the following cash flows for Projects A & B,

2. Given the following cash flows for Projects A & B, answer questions 2a. - 2c. Discount rate = 10% 0 Cash Cash Year flow (A) flow (B) -450 -510 325 530 2 / 325 520 3 325 325 5 325 6 325 2a. What are the NPVs of Projects A & B, and which project has the higher NPV with the data shown in the table above? NPV-A No NPV-B No Replacement Replacement 2a. NPV - No Replacement 2b. Assume Project B has zero residual value after 2 years and is replaced twice to match the life of Project A. With replacement, what is the NPV of Project B after replacing twice? NPV-A With NPV-B With Replacement Replacement 2b. NPV - With Replacement 2c. Which project ( A or B) would you accept as the preferable project using the EAC Method? EAC - Project- EAC - Project

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