Year Project A Project B 0 –$ 51,000 –$ 66,000 1 31,000 30,000 2 26,000 39,000 3 21,000 42,000 The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 14 percent and the inflation rate is 5 percent. Calculate the NPV for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Project A NPV: Project B NPV:
| Year | Project A | Project B | ||
| 0 | –$ | 51,000 | –$ | 66,000 |
| 1 | 31,000 | 30,000 | ||
| 2 | 26,000 | 39,000 | ||
| 3 | 21,000 | 42,000 | ||
|
The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 14 percent and the inflation rate is 5 percent. |
|
Calculate the NPV for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
Project A NPV:
Project B NPV:
Expert Answer
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