Calculate the Net Present Value (NPV) of each project assuming that it will NOT be replaced at
Question:
2. If Project A were replaced with an identical Project A at times 11, 22, 33, 44, 55, and 66, this would be the equivalent of receiving the NPV of Project A calculated in Part 1 above at times 0, 11, 22, 33, 44, 55, 66. What single discount rate would you use to find the Present Value (PV) of these seven payments, and what is the NPV of these seven amounts?
3. If Project B were replaced with an identical Project B at times 7, 14, 21, 28, 35, 42, 49, 56, 63 and 70, this would be the equivalent of receiving the NPV of Project B calculated in Part 1 above at times 0, 7, 14, 21, 28, 35, 42, 49, 56, 63 and 70. What single discount rate would you use to find the Present Value (PV) of these eleven payments, and what is the NPV of these eleven amounts?
Management Accounting
ISBN: 9780730369387
4th Edition
Authors: Leslie G. Eldenburg, Albie Brooks, Judy Oliver, Gillian Vesty, Rodney Dormer, Vijaya Murthy, Nick Pawsey