Find the range of npvs, and subjectively compare the risks

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James Secretarial Services is considering the purchase of one of two new personal computers, P and Q. The company expects both to provide benefits over a 10-year period, and each has a required investment of $3,000. The firm uses a 10% cost of capital. Management has constructed the following table of estimates of annual cash inflows for pessimistic, most likely, and optimistic results.
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a. Determine the range of annual cash inflows for each of the two computers.

b. Construct a table similar to this for the NPVs associated with each outcome for both computers.

c. Find the range of NPVs, and subjectively compare the risks associated with purchasing thesecomputers.

Reference no: EM131108755

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