Question
Asked Feb 6, 2020
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The following are the cash flows of two projects:

 

Year Project A Project B
0 $ (400 ) $ (400 )
1   230     300  
2   230     300  
3   230     300  
4   230        
 

 

a. Calculate the NPV for both projects if the discount rate is 10%. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

 

 

 

 

 

b. Suppose that you can choose only one of these projects. Which would you choose?

 

 

  • Project B
  • Project A
  • Neither

 

 
 
 
 
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Expert Answer

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Step 1

a)

 NPV for Project A and project B is $329.07 and $346.06.

 Computation of NPV:

 Excel spread sheet:

Finance homework question answer, step 1, image 1

Step 2

Excel workings:

Finance homework question answer, step 2, image 1

...

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