## Related questions with answers

Using a $14 \%$ 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.

$\begin{array}{lrr} & \text{Project A}&\text{Project B}&\text{Project C}&\text{Project D}&\text{Project E}\\ \hline\\ \text{Initial investments(CF$_0$)}& \$26,000 & \$500,000 & \$170,000 & \$950,000 & \$80,000 \\ \hline\\ & &\text{Cash inflows(CF$_t$)} \hspace{-8mm}\\ \text{Years(t)}\\ \hline 1 & \$4,000&\$100,000&\$20,000&\$230,000&\$0 \\ 2 & 4,000 & 120,000 &19,000& 230,000&0\\ 3 & 4,000 & 140,000&18,000&230,000&0\\ 4& 4,000 & 160,000&17,000&230,000 &20,000\\ 5 & 4,000 & 180,000 &16,000&230,000&30,000\\ 6 & 4,000 & 200,000 &15,000&230,000&0\\ 7 &4,000 & &14,000&230,000&50,000\\ 8& 4,000 & &13,000&230,000 &60,000\\ 9&4,000 & &12,000&&70,000\\ 10 & 4,000 & &11,000\\ \end{array}$

Solution

VerifiedIn this problem, we are required to calculate the Net present value of $5$ independent projects $P, Q, R, S$, and $T$. Also, acceptability criteria based on the calculation of $NPV$ should be analyzed.

## Create an account to view solutions

## Create an account to view solutions

## More related questions

1/4

1/7