We have $35,000 to invest. I have selected these two projects but I don\'t have

Question

We have $35,000 to invest. I have selected these two projects but I don't have time right now to do the analysis. Would you please compute the Net Present Value (NPV) for these two alternatives and tell me which one we should select? Use 18% as the discount rate. Show your work but put your answer in the box below. Investment required Annual cash inflows Single cash inflow at the end of 6 years Life of the project $35,000 $12,000 $0 6 years Invest in Project Z $35,000 $0 $90,000 6 years Net Present Value (NPV) Show vour work here:

Explanation / Answer

since NPV of investment A is positive ,Investment A should be undertaken .

**Find present value annuity factor and present value factor from their table respectively at 18% for 6 periods

Project A Project Z present value of cash flow PVA 18%,6 *Annual cash flow PVF 18%,6*cash flow 3.49760*12000 .37043*90000 41971.20 33338.7 Less:Initial investment (35000) (35000) Net Present value 6971.20 (1661.30)

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