Question: Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 $ 70,000 $ 85,000 1 50,000 49,000 2 45,000
| Consider the following cash flows on two mutually exclusive projects: |
| Year | Project A | Project B | ||
| 0 | $ | 70,000 | $ | 85,000 |
| 1 | 50,000 | 49,000 | ||
| 2 | 45,000 | 58,000 | ||
| 3 | 40,000 | 61,000 | ||
| The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 12 percent and the inflation rate is 2 percent. |
| Calculate the NPV for each project. (Do not round intermediate calculations and round your final answers to 2 decimal places (e.g., 32.16).) |
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