50.1K

Verified Solution

Link Copied!

P1 Net present value: Independent projects. Using a 10% cost of capital, calculate the net present value for each of the independent projects shown in the following table, and indicate whether each is acceptable.
		Cash flows (CFt) in thousands
	Year	A	B	C	D	E
	0	-$250	-$375	-$550	-$750	-$1,150
	1	50	45	350	200	80
	2	90	55	210	235	135
	3	140	65	165	250	190
	4	80	55	55	265	255
	5		45	45	100	315
	6		35	10	50	380
	7		25			275
	8		15			100
	9		5			45
	10					25
Answer - fill in the blue boxes below.
	Project A
	Discount rate		10%
	CF0		-$250
	CF1		$50
	CF2		$90
	CF3		$140
	CF4		$80
	NPV of project A
	The project will be
	Project B
	Discount rate		10%
	CF0		-$375
	CF1		$45
	CF2		$55
	CF3		$65
	CF4		$55
	CF5		$45
	CF6		$35
	CF7		$25
	CF8		$15
	CF9		$5
	NPV of project B
	The project will be
	Project C
	Discount rate		10%
	CF0		-$550
	CF1		$350
	CF2		$210
	CF3		$165
	CF4		$55
	CF5		$45
	CF6		$10
	NPV of project C
	The project will be
	Project D
	Discount rate		10%
	CF0		-$750
	CF1		$200
	CF2		$235
	CF3		$250
	CF4		$265
	CF5		$100
	CF6		$50
	NPV of project D
	The project will be
	Project E
	Discount rate		10%
	CF0		-$1,150
	CF1		$80
	CF2		$135
	CF3		$190
	CF4		$255
	CF5		$315
	CF6		$380
	CF7		$275
	CF8		$100
	CF9		$45
	CF10		$25
	NPV of project E
	The project will be

Answer & Explanation Solved by verified expert

See Answer