Company is evaluating two projects, Project A and Project B. The Initial Investment on both the projects are $25,000. Both have equal lives. The Project A will generate cash flows of $20,000 and $35,000 in year 2 and year 3. The Project B will generate $15,000 in year-1, $22,000 year-2, and $25,000 In year-3. If the required rate of return is 12%, then which project has the highest annual present worth (APW). APW of project B is more than Project A by $3,267.43 APW of project A is more than Project B by $3,267.43 APW of project B is 23,725.63 APW of project B is the highest
Company is evaluating two projects, Project A and Project B. The Initial Investment on both the projects are $25,000. Both have equal lives. The Project A will generate cash flows of $20,000 and $35,000 in year 2 and year 3. The Project B will generate $15,000 in year-1, $22,000 year-2, and $25,000 In year-3. If the required rate of return is 12%, then which project has the highest annual present worth (APW). APW of project B is more than Project A by $3,267.43 APW of project A is more than Project B by $3,267.43 APW of project B is 23,725.63 APW of project B is the highest
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
Section: Chapter Questions
Problem 1PS
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![Company is evaluating two projects, Project A and Project B. The Initial Investment on both the projects are $25,000. Both have equal lives. The Project A will generate cash flows of $20,000 and $35,000 in year 2 and year 3. The Project B will generate $15,000 in year-1, $22,000 year-2, and $25,000
In year-3. If the required rate of return is 12%, then which project has the highest annual present worth (APW).
APW of project B is more than Project A by $3,267.43
APW of project A is more than Project B by $3,267.43
APW of project B is 23,725.63
APW of project B is the highest](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd7339588-661f-4d6f-971b-8d7fb38c09dc%2Fc3098c49-d1db-4cb4-8d04-7327cc486864%2Ftibrwnc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Company is evaluating two projects, Project A and Project B. The Initial Investment on both the projects are $25,000. Both have equal lives. The Project A will generate cash flows of $20,000 and $35,000 in year 2 and year 3. The Project B will generate $15,000 in year-1, $22,000 year-2, and $25,000
In year-3. If the required rate of return is 12%, then which project has the highest annual present worth (APW).
APW of project B is more than Project A by $3,267.43
APW of project A is more than Project B by $3,267.43
APW of project B is 23,725.63
APW of project B is the highest
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