DETERMINE THE NET PRESENT VALUE (NPV) AND THE DISCOUNT FACTOR (DF) , YEAR 1

Question 1 options:

NPV = $5500 AND DF = 1.1

NPV = $ 4545.45 AND DF = 0.90909

NPV = $ 4090.909 AND DF = 0.81818

NPV = $ 4500.01 AND DF = 0.9000

 

NET PRESENT VALUE EXERCISES (CAPITAL BUDGETING)

A COMPANY IS CONSIDERING TO HAVE AN INVESTMENT ON ONE OF THE TWO PROJECT PROPOSALS NAMELY PROJECT A AND PROJECT B. BOTH PROJECT WILL REQUIRE A $10,000 INITIAL INVESTMENT  WILL RUN FOR 4 YEARS. A CALCULATION FOR NET PRESENT VALUE IS NECESSARY SO THAT THE COMPANY CAN DECIDE WHICH AMONG THE PROJECT WILL THEY INVEST IN.
THE DETAILS OF THE PROJECTS ARE AS FOLLOWS:
YEAR PROJECT A CASH FLOWS PROJECT B CASH FLOWS
1 $ 5000 $ 1000
2 $ 4000 $ 3000
3 $ 3000 $ 4000
4 $ 1000 $ 6750

COMPUTE FOR THE NET PRESENT VALUE AND THE CORRESPONDING DISCOUNT FACTORS  AT EACH YEAR. THE PRE DETERMINED INTEREST RATE IS AT 10%.