Question: Use the NPV method to determine whether Rouse Products should invest in the following projects: Project A: Costs $290,000 and offers seven annual net cash
Use the NPV method to determine whether Rouse Products should invest in the following projects: Project A: Costs $290,000 and offers seven annual net cash inflows of $56,000. Rouse Products requires an annual return of 12% on investments of this nature. Project B. Costs $395,000 and offers 9 annual net cash inflows of $76,000. Rouse Products demands an annual return of 10% on investments of this nature. (Click the icon to view Present Value of $1 table.) (Click the icon to view Present Value of Ordinary Annuity of $1 table.) Read the requirements Requirement 1. What is the NPV of each project? Assume neither project has a residual value. Round to two decimal places. (Enter any factor amounts to three decimal places, X.XXX. Use parentheses or a minus sign for a negative net present value.) Caciulate the NPV (net present value) of each project. Begin by calculating the NPV of Project A. Project A: Present Net Cash Inflow Annuity PV Factor (12%, n=7) Years Value 1-7 Present value of annuity 0 Investment Net present value of Project A
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