You are considering two mutually exclusive projects. both projects have an initial cost of $52,000. project a produces cash inflows of $25,300, $37,100, and $22,000 for years 1 through 3, respectively. project b produces cash inflows of $43,600, $19,800 and $10,400 for years 1 through 3, respectively. the required rate of return is 14.2 percent for project a and 13.9 percent for project b. which project should you accept and why?

Project A is better than Project B because it has a bigger net present value.

Explanation:

Giving the following information:

Project A:

Io= -52,000

1= 25,300

2= 37,100

3= 22,000

Project B:

Io= -52,000

1= 43,600

2= 19,800

3= 10,400

The required rate of return is 14.2 percent for Project A and 13.9 percent for Project B.

We need to calculate the Net Present Value of each project.

NPV= -Io + ∑[Cf/(1+i)^n]

Project A:

NPV= - 52,000 + (25,300/1.142) + (37100/1.142^2) + (22000/1.142^3) = 13,372.95

Project B:

NPV= 8,579.62

Project A is better than Project B because it has a bigger net present value.

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi