[solution] »

A firm is considering 2 capital investment projects. Project A involves an initial cost of $125,0

Description

Answer Download

The Question

A firm is considering 2 capital investment projects. Project A involves an initial cost of $125,000. The discounted present value of all future cash flows is $145,000. Project B requires an initial expenditure of $85,000. The discounted present value of all future cash flows is $102,000.

-Calculate the net present value of each of the 2 projects. Which would be preferred according to the net present value criterion?

• -Calculate the profitability index of each of the 2 projects. Which would be preferred according to the profitability index criterion?

Given,

 

Project A

 

Discounted present value -125,000

 

$145,000 Project B

 

Discounted present value -85,000

 

$102,000 Net Present Value of A

 

Net Present Value of B

 

Profitability Index:

 

A

 

B $20,000...

 

About this Question

STATUS

Answered

QUALITY

Approved

DATE ANSWERED

Oct 14, 2020

EXPERT

Tutor

ANSWER RATING

BEST TUTORS

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

• As a reference for in-depth understanding of the subject.
• As a source of ideas / reasoning for your own research (if properly referenced)
• For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).

This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.

STUCK WITH YOUR PAPER?

Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.

WE GUARANTEE, THAT YOUR PAPER WILL BE WRITTEN FROM SCRATCH AND WITHIN A DEADLINE.