find a project's net present value
Caledonia is considering two additional mutually exclusive projects. The cash flows associated with these projects are as follows:
Year Project A Project B
0 -$100,000 -$100,000
1 32,000
2 32,000
3 32,000
4 32,000
5 32,000 $200,000
a. What is each project’s payback period?
b. What is each project’s net present value?
c. What is each project’s internal rate of return?
d. What has caused the ranking conflict?
e. Which project should be accepted? Why?
I need help with B. What is each project’s net present value?
Here is what I am getting, however, my team mates seem to disagree with me. Can you please help?
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
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