View the step-by-step solution to:

# What is each project's net present value?

What is each project’s net present value?
NPV of Project A = \$32,000 * PVAF5, 0.11 - \$100,000
(\$32,000 * 3.696) – (\$100,000), \$118,272 - \$100,000
Project A NPV: \$18,272

NPV OF Project B = \$200,000 * PVAF5, 0.11 - \$100,000
(\$200,000 * 3.696) – (\$100,000)
\$739,200 - \$100,000 Project B NPV: \$639,200 ( Actually I think I messed up here, I am assuming the cash flow of \$200,000 will occur every year, and I do not think that is correct.) The present value of \$200,000 received at the end of the 5 year period at 11% for 5 years I believe should be 0.59345, and when multiplied with 200,000 gives 118,690. I believe that NPV for B should be 18,690. When all things considered, B seems to be much better than A.

If doing a lease versus buy for the two projects . . .

### Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

### -

Educational Resources
• ### -

Study Documents

Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

Browse Documents