Professional Documents
Culture Documents
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6 $12,000
9-6A. (a) NPVA = - $50,000
t 1 (1 .12) t
= $12,000 (4.111) - $50,000
= $49,332 - $50,000 = -$668
6 $13,000
NPVB = - $70,000
t 1 (1 .12) t
= $13,000 (4.111) - $70,000
= $53,443 - $70,000 = -$16,557
$49,332
(b) PIA =
$50,000
= 0.9866
$53,443
PIB =
$70,000
= 0.7635
(c) $50,000 = $12,000 [PVIFAIRR%,6 yrs]
IRRB = 3.18%
Neither project should be accepted.
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Cumulative
Undiscounted Discounted Discounted
Year Cash Flows PVIF10%,n Cash Flows Cash Flows