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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
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?
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