Question

Given the two projects with given cash flows, the NPV of project A is how many more (or less) dollars than project B if the discount rate is 9%?

Answer with two decimals.

Project A    Project B

CF0: -13,773    -10,543

CF1: 3,480    1,723

CF2: 4,302    2,290

CF3: 9,768    4,794

CF4: 8,914    7,550

CF5: 2,684 12,530

Answer 1

NPV of Project A is less than NPV of project B by   $1,516.71

Step-1:Calculation of NPV of Project A
Year	Cash flow	Discount factor	Present Value
a	b	c=1.09^-a	d=b*c
0	$       -13,773	1.0000	$ -13,773.00
1	3,480	0.9174	3,192.66
2	4,302	0.8417	3,620.91
3	9,768	0.7722	7,542.69
4	8,914	0.7084	6,314.90
5	2,684	0.6499	1,744.42
	NPV		$     8,642.57
Step-2:Calculation of NPV of Project B
Year	Cash flow	Discount factor	Present Value
a	b	c=1.09^-a	d=b*c
0	$       -10,543	1.0000	$ -10,543.00
1	1,723	0.9174	1,580.73
2	2,290	0.8417	1,927.45
3	4,794	0.7722	3,701.85
4	7,550	0.7084	5,348.61
5	12,530	0.6499	8,143.64
	NPV		$   10,159.28
Step-3:Calculation of difference of NPV
NPV of A			$     8,642.57
NPV of B			$   10,159.28
Difference			$   -1,516.71