Project a Requires an Original Investment of $50,000

question 1

Essay

Project A requires an original investment of $50,000. The project will yield cash flows of $15,000 per year for seven years. Project B has a calculated net present value of $13,500 over a four-year life. Project A could be sold at the end of four years for $25,000.
(a) Using the table below, determine the net present value of Project A over a four-year life with salvage value assuming a minimum rate of return of 12%.
(b) Which project provides the greatest net present value?Below is a table for the present value of $1 at compound interest.​ Below is a table for the present value of an annuity of $1 at compound interest.

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Definitions:

Conservatism

A political and social philosophy that promotes retaining traditional social institutions in the context of culture and civilization, often emphasizing respect for authority and resistance to change.

Gender Conflict

The tension and struggle between genders, often arising from differences in societal roles, power inequality, and individual rights.

Engels

Friedrich Engels was a 19th-century German philosopher, social scientist, and author, who co-developed Marxist theory with Karl Marx.

Capitalism

An economic system based on private ownership of the means of production and their operation for profit, characterized by competitive markets and capital accumulation.