Question: Problem 1 Consider the following mutually exclusive revenue producing projects. 1 = $1,000 Option A Year 0 1 2 3 4 5 Cost (400) Revenue

Problem 1 Consider the following mutually exclusive revenue producing projects. 1

Problem 1 Consider the following mutually exclusive revenue producing projects. 1 = $1,000 Option A Year 0 1 2 3 4 5 Cost (400) Revenue 130 130 130 130 130 130 Salvage 150 1 4 5 Option B Year Cost Revenue Salvage 0 (350) 75 2 (200) 125 100 125 125 125 3 4 5 Option C Year Cost Revenue Salvage 0 (200) (150) 100 2 (75) 125 125 125 125 125 For a minimum rate of return of 12 %, calculate the following for each alternative: a) b) NPV Present value ratio Growth rate of return Note: Use a common evaluation period for all three alternatives

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