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Cash flows on two mutually exclusive projects

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Reference no: EM132402863

Consider the following cash flows on two mutually exclusive projects

Year                                      Project A                                            Project B

0                                             -$68,000                                              -$83,000

1                                                 48,000                                                 47,000

2                                                43,000                                                 56,000

3                                                38,000                                                 59,000

The cash flows of Project A are expressed in real terms while those of Project B are expressed in in nominal terms. The appropriate nominal discount rate is 11 percent and the inflation rate is 5 percent.

Calculate the NPV for each project.

                                                                         NPV

Project  A                                                            $

Project  B                                                            $

Reference no: EM132402863

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