A company is considering two alternative investment opportunities, each of which requires an initial cash outlay of $110,000. The expected net cash flows from the two projects follow:
Required:
(1) Based on a comparison of their net present values, and assuming the same discount rate (greater than zero) is required for both projects, which project is the better investment? (Check one answer.)
Project A
Project Z
The projects are equally desirable
(2) Use the table values below to find the net present value of the cash flows associated with Project A, discounted at 12%:

Question

A company is considering two alternative investment opportunities, each of which requires an initial cash outlay of $110,000. The expected net cash flows from the two projects follow:
Required:
(1) Based on a comparison of their net present values, and assuming the same discount rate (greater than zero) is required for both projects, which project is the better investment? (Check one answer.)
________________ Project A
________________ Project Z
________________ The projects are equally desirable
(2) Use the table values below to find the net present value of the cash flows associated with Project A, discounted at 12%:

Kaitlyn Christie · Accepted Answer

Final Answer : (1) Project Z because its cash flows are received earlier than Project A.(2)

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