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Determine the net present value of project

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Problem - Net Present Value-Unequal Lives - Acme Company is evaluating two projects with unequal lives. Project 1 requires an original investment of $50,000. The project will yield cash flows of $12,000 per year for five years. Project 1 could be sold at the end of five years for a price of $30,000. Project 2 has a net present value of $8,900 over a five-year life.

a. Determine the net present value of Project 1 over a five-year life, with residual value, assuming a minimum rate of return of 12%.

b. Which project provides the greater net present value?

Reference no: EM132767678

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