Question

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)

Answer 1

	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.