Answer Happy

Net Present Value-Unequal Lives Project 1 requires an original investment of $65,600. The project will yield cash flows of $14,000 per year for 7 years, Project 2 has a computed net present value of $15,400 over five-year life. Project 1 could be sold at the end of five years for a price of $52,000. Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 0.890 0.826 0.797 0.756 0.694 0.840 0.751 0.712 0.658 0.579 0.792 0.683 0.636 0.572 0.482 0.747 0.621 0.567 0.497 0.402 0.705 0.564 0.507 0.432 0.335 0.665 0.513 0.452 0.376 0.279 0.627 0.467 0.404 0.327 0.233 19 0.592 0.284 0.194 0.424 0.361 0.558 10.386 0.322 0.247 10 0.162 Present Value of an Annuity of $1 at Compound Interest 6% 10% 12% 15% Year 20% 0.94.3 0.909 0.893 0.933 0.870 2 3 4 5 6 7 8
4.550 0.386 0.322 0.247 0.162 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1.833 1.736 1.690 1.626 1.528 2.673 2.487 2.402 2.283 2.106 3.465 3.170 3.037 2.855 2.589 4.212 3.791 3.605 3.353 2.991 4.917 4.355 3.785 3.326 5.582 4.568 4.564 4.160 3.605 8 6.210 5.335 4.968 4.487 3.837 9 6.802 5.759 5.328 4.772 4.031 10. 7.360 6.145 5.650 5.019 4.192 a. Determine the net present value of Project 1 over a five-year life with residual value, assuming a minimum rate of return of 12% If required, round to the nearest dollar b. which project provides the greatest net present value? 2 3 4 5 6 >