Ok, heres the problem:
Project A:
CF0: (25,000)
CF1: 14,742
CF2: 14,742
CF3: 14,742
Project B:
CF0: (23,000)
CF1: 6,641
CF2: 6,641
CF3: 6,641
CF4: 6,641
CF5: 6,641
CF6: 6,641
CF7: 6,641
CF8: 6,641
CF9: 6,641
Im supposed to use the replacement chain method on the first project to make the number of years the same as the second project, so it doesnt have an biased advantage over the second project. I have been working at it for a while and cant see how they got the answer of 23,088 as the NPV for the first project.
When applying the replacement chain method, this is what I did:
CF0: (25,000)
CF1: 14,742
CF2: 14,742
CF3: (10,258), which is (-25,000+14742)
CF4: 14,742
CF5: 14,742
CF6: (10,258)
CF7: 14,742
CF8: 14,742
CF9: (10,258)
what am I doing wrong here?
Project A:
CF0: (25,000)
CF1: 14,742
CF2: 14,742
CF3: 14,742
Project B:
CF0: (23,000)
CF1: 6,641
CF2: 6,641
CF3: 6,641
CF4: 6,641
CF5: 6,641
CF6: 6,641
CF7: 6,641
CF8: 6,641
CF9: 6,641
Im supposed to use the replacement chain method on the first project to make the number of years the same as the second project, so it doesnt have an biased advantage over the second project. I have been working at it for a while and cant see how they got the answer of 23,088 as the NPV for the first project.
When applying the replacement chain method, this is what I did:
CF0: (25,000)
CF1: 14,742
CF2: 14,742
CF3: (10,258), which is (-25,000+14742)
CF4: 14,742
CF5: 14,742
CF6: (10,258)
CF7: 14,742
CF8: 14,742
CF9: (10,258)
what am I doing wrong here?
