Revision as of 12:53, 20 November 2023 by Admin (Created page with "'''Solution: D''' Discounting at 10%, the net present values are 4.59, –2.36, and –9.54 for Projects A, B, and C respectively. Hence, only Project A should be funded. Note that Project C’s net present value need not be calculated. Its cash flows are the same as Project B except being 50 less at time 2 and 50 more at time 4. This indicates Project C must have a lower net present value and therefore be negative. {{soacopyright | 2023 }}")
Exercise
Nov 20'23
Answer
Solution: D
Discounting at 10%, the net present values are 4.59, –2.36, and –9.54 for Projects A, B, and C respectively. Hence, only Project A should be funded. Note that Project C’s net present value need not be calculated. Its cash flows are the same as Project B except being 50 less at time 2 and 50 more at time 4. This indicates Project C must have a lower net present value and therefore be negative.
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