Calculate the net present value of these expected receipts

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The receipts for ZXY’s proposed Project A are estimated to be $6,000 in the first year; $4,500 in the second, and $1,500 in the third. Another project on the ZXY docket, Project B, would bring in $4,000 a year over 3 years. Using an interest rate of 6% for both Projects A and B, calculate the net present value (NPV) of these expected receipts for Project A, and given that forgoing Project A would result in the equivalent of an inflow of $4,000 per year, what should the firm do: go with Project A or avoid the cost and/or look for a more profitable project?

Reference no: EM13902434

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