company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required rates of return are shown below: Project 1 Project 2 Rate of Return: 0.065 0.065 Project Cost: -$1,397,654 -$1,619,835 Year 1 $245,367 $267,345 Year 2 $302,542 $343,563 Year 3 $316,543 $367,834 Year 4 $367,843 $432,098 Year 5 $450,425 $589,435 Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work. Which project should be pursued
company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required rates of return are shown below: Project 1 Project 2 Rate of Return: 0.065 0.065 Project Cost: -$1,397,654 -$1,619,835 Year 1 $245,367 $267,345 Year 2 $302,542 $343,563 Year 3 $316,543 $367,834 Year 4 $367,843 $432,098 Year 5 $450,425 $589,435 Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work. Which project should be pursued
Chapter9: Capital Budgeting Techniques
Section: Chapter Questions
Problem 8PROB
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A company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required
Project 1 |
Project 2 |
|
Rate of Return: |
0.065 |
0.065 |
Project Cost: |
-$1,397,654 |
-$1,619,835 |
Year 1 |
$245,367 |
$267,345 |
Year 2 |
$302,542 |
$343,563 |
Year 3 |
$316,543 |
$367,834 |
Year 4 |
$367,843 |
$432,098 |
Year 5 |
$450,425 |
$589,435 |
- Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work.
- Which project should be pursued? Why?
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