The Following Information Relates to Three Mutually Exclusive Projects REQUIRED $\text { Compute the net present value of each project at a discount rate of } 10 \% \text {. }$

question 63

Essay

The following information relates to three mutually exclusive projects. $\begin{array}{rrrr}& \text { Project } A & \text { Project } B & \text { Project C } \\\text { Initial cash outlay } & \$ 40,000 & \$ 40,000 & \$ 40,000\\\text { Net cash inflows: }\\year1 & 3,000 & 16,000 & 12,000 \\2 & 7,000 & 13,000 & 12,000 \\3 & 11,000 & 10,000 & 12,000 \\4 & 15,000 & 7,000 & 12,000 \\5 & 19,000 & 4,000 & 12,000\\\text { Salvage value Year } 5&8,000 & \text { Nil } & 2,000\end{array}$ REQUIRED:
$\text { Compute the net present value of each project at a discount rate of } 10 \% \text {. }$

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Definitions:

Intermediate

A term often used to describe a middle or median condition, quality, or degree, such as in the context of volcanic rocks that have silica content between felsic and mafic compositions.

Vesicular Basalt

A basalt that contains vesicles.

Basalt

A fine-grained, dark volcanic rock created through the quick cooling of basaltic lava when it is exposed at, or just beneath, the earth's surface.

Felsic

Refers to igneous rocks that are rich in lighter elements like silicon, oxygen, aluminum, sodium, and potassium.