Figure 14-9.Kenner Company is considering two projects. Present value of an Annuity of $1 in Arrears

-Refer to Figure 14-9. Suppose that Kenner Company requires a minimum rate of return of 8%. Which project is better in terms of net present value?

Question

Figure 14-9.Kenner Company is considering two projects.  Present value of an Annuity of $1 in Arrears
 
-Refer to Figure 14-9. Suppose that Kenner Company requires a minimum rate of return of 8%. Which project is better in terms of net present value?

Quizplus · Accepted Answer

Project A has a higher NPV of $10,585 compared to project B's NPV of $7,756. This means that project A generates more cash flows than project B, which provides a better return on investment for Kenner Company. Additionally, since the minimum rate of return required by Kenner Company is 8%, choosing project A with a NPV higher than $10,585 will meet the minimum required rate of return. Therefore, project A is the better choice.