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Compute the net present value of each project, assuming a required rate of 10 percent. If the NPV is negative, enter your answer as a negative value

Compute the net present value of each project, assuming a required rate of 10 percent. If the NPV is negative, enter your answer as a negative value

Essentials Of Investments
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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A clinic is considering the possibility of two new purchases: new MRI equipment and new biopsy equipment. Each project requires an investment of $430,000. The expected life for each is five years with no expected salvage value. The net cash inflows associated with the two independent projects are as follows:


Year
MRI Equipment
Biopsy Equipment
1 $221,000         $49,000        
2 111,000         60,000        
3 157,000         104,000        
4 91,000         212,000        
5 46,000         244,000        

The present value tables provided in Exhibit 19B.1 and Exhibit 19B.2 must be used to solve the following problems.

Required:

Compute the net present value of each project, assuming a required rate of 10 percent. If the NPV is negative, enter your answer as a negative value.

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