Project a Requires an Immediate Investment of $18 000 and Another

question 60

Essay

Project A requires an immediate investment of $18 000 and another $16 000 in three years. Net returns are $4500 after two years, $13 000 after four years, and $8900 after six years. Project B requires an immediate investment of $4000, another $6000 after two years, and $4000 after four years. Net returns are $3375 per year for 8 years. Determine the net present value at 11%. Which project is preferable according to the net present value criterion?

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Definitions:

Self-Improvement

The pursuit of personal growth by improving one's abilities, knowledge, and qualities.

Grade Point Average

An educational scoring system that calculates the average of all grades obtained by a student, indicating their academic performance.

Break-Even Analysis

A financial calculation that determines the point at which revenue received equals the costs associated with receiving the revenue, thereby resulting in neither a profit nor a loss.

Contribution Margin

Contribution margin is a financial metric that represents the difference between a company's sales revenue and variable costs, used to assess the profitability of individual products or services.