Question

"Consider two mutually exclusive projects that will be conducted for a total of 6 years. Project A lasts 3 years (so it will need to be repeated 1 time) and has the following cash flow:
Year 0 -$15,000;
Year 1 $16,000;
Year 2 $17,000;
Year 3 $15,000.
Project B lasts 2 years (so it will need to be repeated 2 times) and has the following cash flow:
Year 0 -$23,000;
Year 1 $19,000;
Year 2 $17,000.
Assume both projects can be repeated with the identical cash flows. The interest rate is 18.9%. Provide the net present worth for 6 YEARS of the project that you should select. If neither project should be selected, enter 0."

Answer 1

Project A:
Year	Cashflows	PVF at 18.90%	Present Values
0	-15000	1	-15000
1	16000	0.841043	13456.69
2	17000	0.707353	12025
3	0	0.594914	0
4	16000	0.500348	8005.576
5	17000	0.420815	7153.847
6	15000	0.353923	5308.846
NPV			30950
Cashflows of Year-3
Inflows		15000
Less: Investment made		-15000
Cashflows of Year-3		0
Project B
Year	Cashflows	PVF at 18.90%	Present Values
0	-23000	1	-23000
1	19000	0.841043	15979.81
2	-6000	0.707353	-4244.12
3	19000	0.594914	11303.37
4	-6000	0.500348	-3002.09
5	19000	0.420815	7995.476
6	17000	0.353923	6016.692
NPV			11049
Cashflows of Year-2
Cash inflows		17000
Less: Investment		-23000
Cashflows of Year-2		-6000
Cashflows of Year-4
Cash inflows		17000
Less: Investment		-23000
Cashflows of Year-4		-6000