Question: Draconian Measures, Inc., is estimating two independent projects. The company uses a 13.8% discount rate for such projects. Cost & Cash flows are shown in the following table. Calculate the NPVs of the two projects?
|
Year
|
Cash flows
|
|
Project 1
|
Project 2
|
|
0
|
mce_markernbsp; (8,425,375)
|
$ (11,368,000)
|
|
1
|
mce_markernbsp; 3,225,997
|
$ 2,112,589
|
|
2
|
mce_markernbsp; 1,775,882
|
$ 3,787,552
|
|
3
|
mce_markernbsp; 1,375,112
|
$ 3,125,650
|
|
4
|
mce_markernbsp; 1,176,558
|
mce_markernbsp; 4,115,899
|
|
5
|
mce_markernbsp; 1,212,645
|
mce_markernbsp; 4,556,424
|
|
6
|
mce_markernbsp; 1,582,156
|
|
|
7
|
mce_markernbsp; 1,365,882
|
|