The cash flows for two projects, A and B, are shown in the table, below. Notice that Project A has a life of 3 years and Project B has a 2 year life. Use the replacement chain approach to calculate the NPV of each project over a common life-span
What is the NPV of the Project A chain minus the NPV of the Project B chain? Assume that the cost of capital is 8%.
Project CFs Project CFs
Time A B
0 -150 -104
1 66 66
2 66 66
3 66 0
NPV $20.09 $13.70
A) $0.45
B) $0.47
C) $0.49
D) $0.50
E) $0.52
E
You might also like to view...
Williamson says that market failure problems that result from contracting through vertical integration can be solved through ______, _____ and _____.
a. Organizational design/innovation/creative destruction b. Information flows/negotiating costs/incentive alignment c. Managing uncertainty/being boundedly rational/being fast to market d. None of the above
What are the benefits to a company of paying attention to corporate social responsibility?
What will be an ideal response?
Legislation affecting business around the world will continue to _________________.
A) become simplified B) increase C) stabilize D) decrease E) relax consumer protections
Program flowcharts depict the type of media being used (paper, magnetic tape, or disks) and terminals.
Answer the following statement true (T) or false (F)