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Project A requires an original investment of $62,700. The project will yield cash flows of...

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Accounting

Project A requires an original investment of $62,700. The project will yield cash flows of $17,600 per year for 4 years. Project B has a computed net present value of $3,750 over a 4-year life. Project A could be sold at the end of 4 years for a price of $19,800.

Following is a table for the present value of $1 at compound interest:

Year 6% 10% 12%
1 0.943 0.909 0.893
2 0.890 0.826 0.797
3 0.840 0.751 0.712
4 0.792 0.683 0.636
5 0.747 0.621 0.567

Following is a table for the present value of an annuity of $1 at compound interest:

Year 6% 10% 12%
1 0.943 0.909 0.893
2 1.833 1.736 1.690
3 2.673 2.487 2.402
4 3.465 3.170 3.037
5 4.212 3.791 3.605

Use the tables above.

a. Determine the net present value of Project A over a 4-year life with salvage value assuming a minimum rate of return of 12%. Round your answer to two decimal places. _______

b. Which project provides the greatest net present value?b. Which project provides the greatest net present value? ______

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