Project A requires an original investment of $65,000.The project will yield cash flows of $15,000 per year for 7 years.Project B has a calculated net present value of $5,500 over a 5-year life.Project A could be sold at the end of 5 years for a price of $30,000.(a)Using the table below,determine the net present value of Project A over a 5-year life with salvage value assuming a minimum rate of return of 12%.(b)Which project provides the greatest net present value?
Below is a table for the present value of $1 at compound interest.

Below is a table for the present value of an annuity of $1 at compound interest.

Question

Project A requires an original investment of $65,000.The project will yield cash flows of $15,000 per year for 7 years.Project B has a calculated net present value of $5,500 over a 5-year life.Project A could be sold at the end of 5 years for a price of $30,000.(a)Using the table below,determine the net present value of Project A over a 5-year life with salvage value assuming a minimum rate of return of 12%.(b)Which project provides the greatest net present value?
Below is a table for the present value of $1 at compound interest.
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  Below is a table for the present value of an annuity of $1 at compound interest.

Quizplus · Accepted Answer

The Answer of Project A requires an original investment of $65,000.The project will yield cash flows of $15,000 per year for 7 years.Project B has a calculated net present value of $5,500 over a 5-year life.Project A could be sold at the end of 5 years for a price of $30,000.(a)Using the table below,determine the net present value of Project A over a 5-year life with salvage value assuming a minimum rate of return of 12%.(b)Which project provides the greatest net present value?
Below is a table for the present value of $1 at compound interest.
​
  Below is a table for the present value of an annuity of $1 at compound interest.

Project a Requires an Original Investment of $65,000