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Determine the net present value of project one

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Reference no: EM132524081

Net Present Value-Unequal Lives

  • Project 1 requires an original investment of $71,500. The project will yield cash flows of $19,000 per year for nine years. Project 2 has a calculated net present value of $20,000 over a seven-year life. Project 1 could be sold at the end of seven years for a price of $79,000.

Use the Present Value of $1 at Compound Interest and the Present Value of an Annuity of $1 at Compound Interest tables shown below.

Question 1: Determine the net present value of Project 1 over a seven-year life with residual value, assuming a minimum rate of return of 20%. If required, round to the nearest dollar.

Reference no: EM132524081

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