%3Cp%3EIn%20the%26nbsp%3Bspreadsheet%26nbsp%3Bdata.xls%26nbsp%3Byou%26nbsp%3Bwil
ID: 2708502 • Letter: #
Question
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/ Answer
NPV OF PROJECT -1 = -10000 -10000/(1.09) -5000/(1.09^2) + 1000/(1.09^4) + 5000/(1.09^5) + 10000/(1.09^6) + 30000/(1.09^7) + 30000/(1.09^15)
= 11185.21
NPV OF PROJECT -2 = -13000 -18000/(1.09) + 10000/(1.09^2) + 7000/(1.09^4) + 27000/(1.09^T1) + 21000/(1.09^T2)
=-16138 + 27000/(1.09^T1) + 21000/(1.09^T2)
T1 = 6
T2 = 7
NOW NPV OF PROJECT 2 = -16138 + 27000(1.09^6) + 21000/(1.09^7)
= -16138 + 16099.22 + 11487.72
=11448.94
SO ITS ALMOST SAME
11185.21 ALMOST EQUAL TO 11448.94
SO
T1 = 6
AND T2 = 7
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