All categories

3 years ago

Assume that your firm wants to choose between two project options:

Social Studies

1 answer:

stepladder [879]3 years ago

3 0

Answer: Project B should be chosen as it has a higher NPV of $70,314.97

Explanation:

You need to find the Net Present Value of both projects. The better investment is the one with a higher Net Present Value.

As there will be inflation, this needs to be included in the required return:

= 10% + 3%

= 13%

This will be the rate for discounting.

Project A:

Net Present Value = Present value of cash inflows - Cash invested

Present value of cash inflows:

This is a constant inflow so is an annuity. Present value will be:

= Amount * Present value interest factor of annuity, 5 years, 13%

= 150,000 * 3.5172

= $527,580

Net Present value = 527,580 - 500,000

= $27,580

Project B:

Net Present Value = Present value of cash inflows - Cash invested

= 50,000 / (1 + 13%)² + 200,000 / 1.13³ + 300,000 / 1.13⁴ + 200,000 / 1.13⁵ - 400,000

= 470,314.97 - 400,000

= $70,314.97

Project B should be chosen as it has higher NPV.

You might be interested in

Which of the following is an example of a government making a decision using cost and benefits?

soldier1979 [14.2K]

Answer:

a or d

Explanation:

5 0

3 years ago

What capital city in Europe has the highest or largest urban concentration of over 10,500,000 people which makes it the sixth la

san4es73 [151]

Answer: Moscow, Russia.

Explanation:

Moscow is the capital city of Russia. It has an estimated population of 10,500,000 people with a very low density per square mile. It is the second most populated city in Europe behind Istanbul, Turkey. The name Moscow is often thought to be derived from the Moskva River.

It has one of Europe's largest economies, and low living costs compared to other major cities.

5 0

3 years ago

Read 2 more answers

what were some of the environmental interactions of the archaic and woodland Indians during the prehistoric period before the Eu

nadezda [96]

One of the most notable interactions between the Archaic and the woodlands Indians was the use of its technology.

Archaic Indian lived with hunter-gathering methods. So, during that period, a lot of pottery/crafting inventions was made such as hunting tools, leather boots, weapons, agricultural tools, art, etc
The woodland Indians lived mostly through agricultural methods. The Woodlands used and developed the tools&technology that created by the Archaic to sustain their ariculutral -manufacturing activities

6 0

3 years ago

Keith is trying to help his son, judd, deal with the devastating floods that left 40,000 people in the midwest homeless. judd's

Solnce55 [7]

<span>One strategy Keith should not implement is to "</span>allow his child to watch repeated news footage of the tragedy".

It is common in present day media that they keep repeating the painful and tragic images as well as videos of an event which may bring back the stressful and traumatic memories one has gone through and for a child this can be devastating and leaving a permanent scar on the personality.

3 0

3 years ago

James Maddux has proposed that some psychological disorders, including _____________, are social constructions

Otrada [13]

Answer:

The oppositional defiant disorder is the correct answer to this question .

Explanation:

The oppositional defiant disorder is one form of behavioural disorder.Children are unsupportive, violent and aggressive towards colleagues, parents , teachers, and authority in the oppositional defiant disorder.

Developmental problems can cause oppositional defiant disorder, or they can learn the behaviors.
Most children and adolescents with oppositional defiant disorder may experience other behavioral problems, such as obsessive-compulsive disorder, intellectual difficulties, anxiety disorders (such as mental illness), and chronic anxiety.

5 0

3 years ago