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kiruha [24]
3 years ago
13

Lithium, inc. is considering two mutually exclusive projects, a and

Business
1 answer:
Alenkasestr [34]3 years ago
5 0
Missing question: Which project should be implemented based on net present value?

Solution:
NPV = -Co + C1/(1+r) + C2/(1+r)^2 + ... + Cn/(1+r)^n

Project A
NPV = -95000 + 65000/(1+0.1) + 75000/(1+0.1)^2 = $26,074.38

Project B
NPV = -120000+ 64000/(1+0.1) + 67000/(1+0.1)^2 + 56000/(1+0.1)^3 + 45000/(1+0.1)^4 = $66,362.95

The rule: The project with higher NPV is chosen for implementation. Based on the NPVs calculated, project B is the most viable.
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