Project A requires an original investment of $50,000. The project will yield cash flows of $15,000 per year for 7 years. Project B has a computed net present value of $13,500 over a 4-year life. Project A could be sold at the end of 4 years for $25,000. (a) Using the present value tables that follow, determine the net present value of Project A over a 4-year life with salvage value assuming a minimum rate of return of 12%. (b) Which project provides the greatest net present value?
Following is a table for the present value of $1 at compound interest: Following is a table for the present value of an annuity of $1 at compound interest:

Question

Project A requires an original investment of $50,000. The project will yield cash flows of $15,000 per year for 7 years. Project B has a computed net present value of $13,500 over a 4-year life. Project A could be sold at the end of 4 years for $25,000. (a) Using the present value tables that follow, determine the net present value of Project A over a 4-year life with salvage value assuming a minimum rate of return of 12%. (b) Which project provides the greatest net present value?
Following is a table for the present value of $1 at compound interest:  Following 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 $50,000. The project will yield cash flows of $15,000 per year for 7 years. Project B has a computed net present value of $13,500 over a 4-year life. Project A could be sold at the end of 4 years for $25,000. (a) Using the present value tables that follow, determine the net present value of Project A over a 4-year life with salvage value assuming a minimum rate of return of 12%. (b) Which project provides the greatest net present value?
Following is a table for the present value of $1 at compound interest:  Following is a table for the present value of an annuity of $1 at compound interest:

Project a Requires an Original Investment of $50,000