The Following Information Relates to Three Mutually Exclusive Projects REQUIRED:
Compute the Net Present Value of Each Project at \text

question 47

Essay

The following information relates to three mutually exclusive projects.
$\begin{array}{lrrr}& \text { Project } A & \text { Project B } & \text { Project C } \\\text { Initial cash outlay } & \$ 40,000 & \$ 40,000 & \$ 40,000\\\text { Net cash inflows: }\\\text { Year }1 & 3,000 & 16,000 & 12,000 \\2 & 7,000 & 13,000 & 12,000 \\3 & 11,000 & 10,000 & 12,000 \\4 & 15,000 & 7,000 & 12,000 \\5 & 19,000 & 4,000 & 12,000 \\\text {salvage value Year 5 } & 8,000 & \mathrm{Nil} & 2,000\end{array}$
REQUIRED:
Compute the net present value of each project at a discount rate of 10%.

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing to sell at a given price.

Price Floor

A government or group-imposed price control or limit on how low a price can be charged for a product.

Demand Decrease

A situation where the quantity of a product or service desired by buyers decreases, usually due to changes in consumer preferences, incomes, or prices of related goods.

Demand Equation

A mathematical representation expressing the relationship between the quantity of a good demanded and its price, along with other factors affecting demand.