Score 017 of 1 pt 3 of 113 complete HW Score 682 075 of 1 P

Score: 0.17 of 1 pt 3 of 11(3 complete) HW Score: 6.82%, 0.75 of 1 & Problem 9.LO3.30 (similar to) Question Help Calculate the (a) net present value (NPV), (b) proftability index (Pl), and (c) internal rate of retun (IRR) for Projects 1 and 2 (cash fiows shown below), assuming a required return of 12%. Year 0 Project 1 -$410 $170 $190 $190 $330 Project 2 -$400 $160 $120 $190 $300 a. What is the NPV of Project 1? $ 238.21 (Round to the nearest cent.) What is the NPV of Project 2? (Round to the nearest cent)

Solution

As per policy, only one question is allowed to answer at a time, so answering Q1:

Prob 9.LO3.30 :
Year	CF project 1	CF project 2	Discount 12%	PV project 1	PV project 2
0	-470	-400	1	-470	-400
1	170	160	0.893	151.81	142.88
2	190	120	0.797	151.43	95.64
3	190	190	0.712	135.28	135.28
4	330	300	0.636	209.88	190.8
NPV=				178.4	164.6
NPV of project 1 = $178.4
NPV of project 2 = $164.60