Homework answers / question archive / Consider the following mutually exclusive projects:   Project Year 0 C/F Year 1 C/F Year 2 C/F Year 3 C/F Year 4 C/F Year 5 C/F Year 6 C/F Year 7 C/F Discount Rate A -79 20 25 30 35 40 N/A N/A 15% B -80 25 25 25 25 25 25 25 15%   1) The NPV of project A is closest to: A) $21

Consider the following mutually exclusive projects:   Project Year 0 C/F Year 1 C/F Year 2 C/F Year 3 C/F Year 4 C/F Year 5 C/F Year 6 C/F Year 7 C/F Discount Rate A -79 20 25 30 35 40 N/A N/A 15% B -80 25 25 25 25 25 25 25 15%   1) The NPV of project A is closest to: A) $21

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Consider the following mutually exclusive projects:

 

Project	Year 0 C/F	Year 1 C/F	Year 2 C/F	Year 3 C/F	Year 4 C/F	Year 5 C/F	Year 6 C/F	Year 7 C/F	Discount Rate
A	-79	20	25	30	35	40	N/A	N/A	15%
B	-80	25	25	25	25	25	25	25	15%

 

1) The NPV of project A is closest to:

A) $21.70

B) $24.00

C) $18.10

D) $16.90

 

2) The NPV of project B is closest to:

A) $18.10

B) $21.70

C) $24.00

D) $16.90

3) The equivalent annual benefit of project A is closest to:

A) $21.70

B) $5.05

C) $24.00

D) $3.40

4) The equivalent annual benefit of project B is closest to:

A) $5.05

B) $5.75

C) 3.45

D) $3.40

 

5) Using the equivalent annual benefit method, which project would you select and why?