In: Finance
Which project should D&A should pick?
Project A:
t |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
CF |
10,000 |
-55,000 |
155,000 |
125,000 |
119,000 |
113,500 |
201,500 |
123,000 |
-119,000 |
54,000 |
Project B:
t |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
CF |
95,000 |
112,000 |
155,000 |
-125,000 |
119,000 |
-153,000 |
255,000 |
-113,000 |
139,000 |
39,000 |
The cost of capital (discount rate) for both projects is 7.89% /year. Based on the given information, please calculate the present value of the cash flow for both projects. Which project has a higher present value? Please show all the calculations