Question

Can you please help me with these?

You have 2 projects with the following specifications the cash flow (positive & negative) and the initial investments are shown. If NPV (Net Present Value) is the only criterion for the selection, which project do you choose? Show your work. The IRR (Internal Rate of Return) of the company is 12%. $2,000 12,000$5,000 $15,000 $10,000 Project A Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $15,0000 $12,000 $2,0000 $0.0 $20,000 $1,000 Project B Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 $5,0000

Answer 1

	Method 1
	calculate NPV Using NPV Function in excel and subtract Initial cash Outflow from it
	Year	Project A	Project B
	0
	1	2,000	12,000
	2	12,000	2,000
	3	5,000	0
	4	15,000	20,000
	5	(15,000)	(5,000)
	6	10,000	1,000
	Discount rate	12%	12%
	NPV=	20,998.62	22,688.53
Project B is better because of Higher NPV
Method 2
Using Financial Calculator
Project A
	Press CF
	CF0=	0	(Press Enter and scroll down)
	CF1=	2,000	(Press Enter and scroll down)
	CF2=	12,000	(Press enter and scroll down twice)
	CF3=	5,000	(Press enter and scroll down twice)
	CF4=	15,000	(Press enter and scroll down twice)
		(15,000)	(Press enter and scroll down twice)
		10,000	(Press enter and scroll down twice)
	Press NPV
	Interest=	12	(Press Enter and scroll down)
	Press CPT+NPV
	NPV=	20,998.62
Using Financial Calculator
Project B
	Press CF
	CF0=	0	(Press Enter and scroll down)
	CF1=	12,000	(Press Enter and scroll down)
	CF2=	2,000	(Press Enter and scroll down)
	CF3=	0	(Press Enter and scroll down)
	CF4=	20,000
	CF5=	(5,000)
	CF6=	1,000
	Press NPV
	Interest=	12	(Press Enter and scroll down)
	Press CPT+NPV
	NPV=	22,688.53