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In: Finance

The cash flows and Net salvage value of Project X is given the following table: Year...

The cash flows and Net salvage value of Project X is given the following table:

Year

Cash flows

Salvage Value

0

-5,800

4,800

1

2,100

3,000

2

3,400

2,200

3

3,600

1,800

4

1,800

0

Based on the Economic Life of this project and the cost of capital is 12%, in what year should you abandoning this Project X?

  • A. Year 3, since NPV in year 3 = $8,429
  • B. Year 3, since NPV in year 3 = $2,629
  • C. Year 4, since NPV in year 4 = $2,892
  • D. Year 4, since NPV in year 4 = $2,491
  • E. Year 1, since NPV in year 1 = $1,24

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