114) The Serena Company is evaluating two mutually exclusive projects with three-year lives. Each project requires an investment of $10,000. The projects have the following cash inflows received at the end of each year.
YEARPROJECT 1PROJECT 2
a. Determine the net present value of each project using an 8% discount rate.
b. What can you conclude about the effect the timing of the cash flows has upon a project’s net present value?
115) Cedric Inc. is considering two mutually exclusive projects.
Project 1 requires an investment of $100,000 while project 2 requires an investment o $110,000.
Revenues and costs for each project are shown below.
The company estimates that at the end of the fourth year Project 1 would have a salvage value of $20,000 and Project 2 would have a salvage value of $10,000.
Determine the net present value of each project using a 14% discount rate.