Web Technologies is deciding how best to use its limited capital and must choose between two different projects with different initial investments and annual cash flows. Year Initial Investment 1 2 3 4 Total Project 1 $260,000 Work Area: Project 1: Cash Inflows $85,000 85,000 85,000 85,000 $340,000 Project 2: Web project its cost of capital (required rate of

 

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Web Technologies is deciding how best to use its limited capital and must choose between two different projects with different initial investments and annual cash flows. Year Initial Investment 1 2 3 4 Total Project 1 $260,000 Work Area: Project 1: Cash Inflows $85,000 85,000 85,000 85,000 $340,000 Project 2: Web project its cost of capital (required rate of return) to be 8% annually. Required: 1) Calculate the Net Present Value (NPV) for both projects. You may utilize the PV factor tables or Excel to derive your answer. You can print out this exercise for reference. 2) Once you've calculated the NPV for both projects, submit your answers by clicking on the "NPV Quiz" link within the module in Canvas. PV of Annual Cash Flow (above) Less: Initial Investment Net Present Value (NPV) for Project 1 Project 2 $315,000 Cash Inflows $92,000 92,000 92,000 92,000 $368,000 PV of Annual Cash Flow (above) Less: Initial Investment Net Present Value (NPV) for Project 2 $ ( $ $ ( $ )

Expert Answer

To calculate the Net Present Value (NPV) of each project, we need to discount each year's cash inflo View the full answer