Question

Assume that Cullumber Inc. has a capital budget of $208,000. In addition, it has the following projects for evaluation. Determine which project(s) should be chosen, assuming k is 13 percent. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to 2 decimal places e.g. 58,971.25.)

NPVAB		$
NPVAC		$
NPVBC		$
Projects A aloneProjects B aloneProjects C aloneProjects A & BProjects A & CProjects B & C should be chosen.

Assume that Cullumber Inc. has a capital budget of $208,000. In addition, it has the following projects for evaluation. Determine which project(s) should be chosen, assuming kis 13 percent. and the final answers to 2 decimal places e.g. 58,971.25.) Project A B с Initial CF -98,500 -70,000 -109,500 CF1 78,500 47,500 52,500 CF2 77,500 58,500 98,500 CF3 0 68,500 78,500 NPVAB $ NPVAC NPVBC should be chosen. estion Assistance, you will learn while you earn points based on the Point Potential Policy set by your instructor. Projects A alone Projects B alone Projects C alone Projects A & B Projects A&C Projects B&C

Answer 1

Solution: Year a g=a*f 0 1 2 3 Project A Project B Project C PV factor at 13% PV factor working Cashflow PV Cashflow PV Cashflow PV b C=a*b d e=a*d f 1.00000 1/(1+0.13)^0 -985001-98500.00 -70000 -70000.00 -109500-109500.00 0.88496 1/(1+0.13)^1 78500 69469.36 47500 42035.60 52500 46460.40 0.78315 1/(1+0.13)^2 77500 60694.13 58500 45814.28 98500 77140.28 0.69305 1/(1+0.13)^3 0 0.00 68500 47473.93 78500 54404.43 NPV 31663.49 NPV 65323.80 NPV 68505.10 NPVAB NPVAC NPVBC 31663.49+65323.80 31663.49+68505.10 65323.80+68505.10 96987.29 100168.59 133828.90 Project BC should be choosen. (as it has highest NPV)