Problem
Draconian Measures, Inc., is evaluating two independent projects. The company uses a 13.8 percent discount rate for such projects. The cost and cash flows are shown in the following table. What are the NPVs of the two projects?
|
Project 1
|
Project 2
|
|
0
|
$(8,425,375)
|
$(11,368,000)
|
|
1
|
$3,225,997
|
$2,112,589
|
|
2
|
$1,775,882
|
$3,787,552
|
|
3
|
$1,375,112
|
$3,125,650
|
|
4
|
$1,176,558
|
$4,115,899
|
|
5
|
$1,212,645
|
$4,556,424
|
|
6
|
$1,582,156
|
|
|
7
|
$1,365,882
|
|