ABC Corp. has the following mutually exclusive projects that both have a required return of 13.93...

ABC Corp. has the following mutually exclusive projects that both have a required return of 13.93 %:

Year	Project A	Project B
0	$-14,227	$-9,648
1	9,216	4,475
2	7,177	4,288
3	2,375	6,118

What is the NPV of project B? (Round answer to 2 decimal places, do not round intermediate calculations)

Expert Solution

	Cash Flow		PV of Cash Flow
	Project- A	Project- B	PV [email protected]%	Project- A	Project- B
0	$ -14,227.00	$ -9,648.00	$ 1.00	$ -14,227.00	$ -9,648.00
1	$ 9,216.00	$ 4,475.00	$ 0.88	$ 8,088.88	$ 3,927.71
2	$ 7,177.00	$ 4,288.00	$ 0.77	$ 5,529.16	$ 3,303.48
3	$ 2,375.00	$ 6,118.00	$ 0.68	$ 1,605.98	$ 4,136.99
NPV		$ 997.02	$ 1,720.17

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PV of Cash Flow = Cash Flow*PV Factor

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Hope you understood.

jeff jeffy answered 1 year ago

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