Question
Asked Apr 11, 2019

 

 

31.

(Table: Present Value of Projects A, B, C, and D) Examine the table Present Value of Projects A, B, C, and D. Given the information, if the annual interest rate were 10%, which project should be chosen?

 

A)

D

 

B)

C

 

C)

A

 

D)

B

Table: Present Value of Projeets A, B, C, and D
Dollars
Realized 1 Year
from Today
S75
-50
- 60
-24
Dollars
Realized Today
Project
-$20
101
110
76
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Table: Present Value of Projeets A, B, C, and D Dollars Realized 1 Year from Today S75 -50 - 60 -24 Dollars Realized Today Project -$20 101 110 76

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Step 1

This is a Finance question and should have been posted under Finance and not Economics. Please make sure you post your question under correct subject lest it should be rejected in which case you'll have to repost the question and you'll end up wasting time.

Step 2

Present value = Sum of discounted cashflows = Cashflow in year 0 (now ) + Cashflow in year n/ (1+ r%)^n 

                                                                                                       = Cashflow in year 0 + Cashflow in year 1/ (1+ 10%)^1

These present values can be calculated for each of the projects and the project with highest present value must be chosen if initial investment is the same  for all projects.                                                                                            

Step 3

Present values can be calculate...

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