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QUESTION 2
Monson Company is considering three investment opportunities with cash flows as described below: (Ignore income taxes in this problem.)
| Project A: Cash investment now | $15,000 |
| Cash inflow at the end of 5 years | $21,000 |
| Cash inflow at the end of 8 years | $21,000 |
| | |
| Project B: Cash investment now | $11,000 |
| Cash outflow for 5 years | $3,000 |
| Addition cash inflow at the end of 5 years | $21,000 |
MUST SHOW ALL CALCULATIONS a. Calculate the net present value for project A. Monson Company uses a 12% discount rate.
b. Calculate the net present value for project B. Monson Company uses a 12% discount rate.
c. Which project should the company accept and why?
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