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HPC is considering two unequal-lived, mutually exclusive capital budgeting projects

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HPC is considering two unequal-lived, mutually exclusive capital budgeting projects. The cash flows for each project are shown below. Calculate the NPV and the annualized net present value (ANPV) for each project, using the firm's 11% WACC. Which project would you recommend, and why?

 

Year

Project A

Project B

0

$(54,000)

$(78,000)

1

$16,000

$36,000

2

$25,000

$32,000

3

$35,000

$28,000

4

$38,000

$24,000

5

 

$20,000

6

 

$16,000

7

 

$14,000

8

 

$12,000