Consider the following cash flows on two mutually exclusive projects: ...
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Finance
Consider the following cash flows on two mutually exclusive projects:
Year
Project A
Project B
0
$
62,000
$
77,000
1
42,000
41,000
2
37,000
50,000
3
32,000
53,000
The cash flows of Project A are expressed in real terms, whereas those of Project B are expressed in nominal terms. The appropriate nominal discount rate is 10 percent and the inflation rate is 2 percent.
Calculate the NPV for each project. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)
Which project should you choose?
multiple choice
Project B
Project A
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