You've estimated the following cash flows (in $) for two projects: Year Project A Project B 0 -5,100 -7,650 1 1,325 1,325 2 2,148 2,148 3 3,504 7,040 The required return for both projects is 8%. What is the NPV for project A? What is the NPV for project B? Which project seems better according to the NPV method? Project A Project B

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter5: Investment Decisions: Look Ahead And Reason Back
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You've estimated the following cash flows (in $) for two projects:

Year Project A Project B
0 -5,100 -7,650
1 1,325 1,325
2 2,148 2,148
3 3,504 7,040

The required return for both projects is 8%.

What is the NPV for project A?

What is the NPV for project B?

Which project seems better according to the NPV method?

Project A
Project B
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