Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. suppose a company has two mutually exclusive proje

Suppose a company has two mutually exclusive projects, both of which are three years in length....

90.2K

Verified Solution

Question

Finance

Suppose a company has two mutually exclusive projects, both ofwhich are three years in length. Project A has an initial outlay of$6,000 and has expected cash flows of $4,000 in year 1, $5,000 inyear 2, and $5,000 in year 3. Project B has an initial outlay of$9,000 and has expected cash flows of $2,000 in year 1, $4,000 inyear 2, and $5,000 in year 3. The required rate of return is 10%for projects at this company. What is the net present value for thebest project? (Answer to the nearest dollar.)

Answer & Explanation Solved by verified expert
4.0 Ratings (534 Votes)
Project A Net present value is solved using a financial calculator The steps to solve on the financial calculator Press the CF button CF0 6000 It is entered with a negative sign since it is a cash outflow Cash flow for all the years should be entered Press Enter and down    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Suppose a company has two mutually exclusive projects, both ofwhich are three years in length. Project A has an initial outlay of$6,000 and has expected cash flows of $4,000 in year 1, $5,000 inyear 2, and $5,000 in year 3. Project B has an initial outlay of$9,000 and has expected cash flows of $2,000 in year 1, $4,000 inyear 2, and $5,000 in year 3. The required rate of return is 10%for projects at this company. What is the net present value for thebest project? (Answer to the nearest dollar.)

Other questions asked by students

Calculus
1.2K views

2 Consider f x cos x 2 cosx over one complete period beginning with x...

Finance
1.2K views

1. After big stock price run ups, debt ratio falls, but firms tend to issue equity...

Finance
1.2K views

Suppose on March 1 you take a long position in a June crude oil futures contract...

Electrical Engineering
1.2K views

The standard method of representing negative numbers in the binary system is with 2's complement notation....

Accounting
1.2K views

What is a favorable variance and what is an unfavorable variance? How do you calculate them?...

Physics
1.2K views

214 Electrons in a conductor are moving randomely due to thermal energy this making it...

Geometry
1.2K views

Apr 18 12 57 01 PM Given the circle below with secants CDE and GFE...

Algebra
1.2K views

2 Let A 1 2 1 1 1 302 2 0 1 1 3 1...

Accounting
1.2K views

URGENT: We consider a cart of mass M that is running on wobbly wheels. To...

Accounting
1.2K views

Required information The following information applies to the questions displayed below.) Cane Company manufactures two...

Accounting
1.2K views

12. Given 2 5k <>

Finance
1.2K views

Quick Answer Urgent Please Answer ASAP 12 Value a perpetuity that pays 2,700 starting...