Reference no: EM131521623
Cash flows for projects F and G are given below.
Cash Flows ($)ProjectC0C1C2C3C4C5Etc.F -10,200 +7,200 +6,200 +5,200 0 0 ...G -10,200 +2,040 +2,040 +2,040 +2,040 +2,040 ...
The cost of capital is assumed to be 12%. Assume the forecasted cash flows for projects of this are typically overstated. That is, each $1 in forecasted cash flows for periods C1 and later should be reduced by 6 cents based on prior experience. But a lazy financial manager, unwilling to take the time to either argue with the project's sponsors or to adjust the cash flows, instructs the managers to use a discount rate of 18%.
a. What are the projects' true NPVs? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
NPVProject F$ Project G$
b. What are the NPVs at the 18% discount rate? (Do not round intermediate calculations. Round your answers to 2 decimal places.)
NPVProject F$ Project G$ References
eBook & Resources