Question

Using a 14%14 \% cost of capital, determine the net present value for each of the independent projects shown in the following table, and indicate whether each is acceptable.

Project AProject BProject CProject DProject EInitial investments(CF0)$26,000$500,000$170,000$950,000$80,000Cash inflows(CFt)Years(t)1$4,000$100,000$20,000$230,000$024,000120,00019,000230,000034,000140,00018,000230,000044,000160,00017,000230,00020,00054,000180,00016,000230,00030,00064,000200,00015,000230,000074,00014,000230,00050,00084,00013,000230,00060,00094,00012,00070,000104,00011,000\begin{array}{lrr} & \text{Project A}&\text{Project B}&\text{Project C}&\text{Project D}&\text{Project E}\\ \hline\\ \text{Initial investments(CF$_0$)}& \$26,000 & \$500,000 & \$170,000 & \$950,000 & \$80,000 \\ \hline\\ & &\text{Cash inflows(CF$_t$)} \hspace{-8mm}\\ \text{Years(t)}\\ \hline 1 & \$4,000&\$100,000&\$20,000&\$230,000&\$0 \\ 2 & 4,000 & 120,000 &19,000& 230,000&0\\ 3 & 4,000 & 140,000&18,000&230,000&0\\ 4& 4,000 & 160,000&17,000&230,000 &20,000\\ 5 & 4,000 & 180,000 &16,000&230,000&30,000\\ 6 & 4,000 & 200,000 &15,000&230,000&0\\ 7 &4,000 & &14,000&230,000&50,000\\ 8& 4,000 & &13,000&230,000 &60,000\\ 9&4,000 & &12,000&&70,000\\ 10 & 4,000 & &11,000\\ \end{array}

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Answered 12 months ago
Answered 12 months ago
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In this problem, we are required to calculate the Net present value of 55 independent projects P,Q,R,SP, Q, R, S, and TT. Also, acceptability criteria based on the calculation of NPVNPV should be analyzed.

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