company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required rates of return are shown below:   Project 1 Project 2 Rate of Return: 0.065 0.065 Project Cost: -$1,397,654 -$1,619,835 Year 1 $245,367 $267,345 Year 2 $302,542 $343,563 Year 3 $316,543 $367,834 Year 4 $367,843 $432,098 Year 5 $450,425 $589,435 Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work. Which project should be pursued

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company has two projects that are under evaluation. The project investment costs, annual projected cash flows, and required rates of return are shown below:

 

Project 1

Project 2

Rate of Return:

0.065

0.065

Project Cost:

-$1,397,654

-$1,619,835

Year 1

$245,367

$267,345

Year 2

$302,542

$343,563

Year 3

$316,543

$367,834

Year 4

$367,843

$432,098

Year 5

$450,425

$589,435

  1. Compute the NPV for each project using Microsoft Excel NPV's function. Be sure to show your work.
  2. Which project should be pursued? Why?
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