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?
a)
NPV for Project A and project B is $329.07 and $346.06.
Computation of NPV:
Excel spread sheet:
Excel workings:
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