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Prepare separate computations for each investment

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Reference no: EM132586256

Comparison of Projects Using Net Present Value

Sharp Company has $15,000 to invest. The company is trying to decide between two alternative uses of the funds shown below. Sharp Company uses a 16% discount rate.

                                                                 Invest in                      Invest in

                                                                   Project A                    Project B

Investment required                                $15,000                  $15,000

Annual cash inflows                                 $4,000                       $0

Single cash inflow at the end of 10 years       $60,000

Life of the project                                   10 years                        10 years

Required:

Question 1: Which investment would you recommend that the company accept? Show all computations using net present value. Prepare separate computations for each investment.

Reference no: EM132586256

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