Question: Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 1 2 63,000 78,000 $ $ 43,000 42,000 38,000

Consider the following cash flows on two mutually exclusive projects: Year Project A Project B 0 1 2 63,000 78,000 $ $ 43,000 42,000 38,000 51,000 33,000 54,000 3 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 5 percent. Calculate the NPV for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) NPV Project A Project B Which project should you choose? Project A Project B
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