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(Annualized Net Present Value) A financial analyst has just calculated the NPV of two mutually exclusive projects.

Project M has a NPV of $11,500 while project N a NPV of $19,000. The cost of capital is 10% and project M has a three-year cash flow period while project N has a six-year cash flow period.

Obviously, if ranked on a NPV basis, N is preferable to M, but the projects need to be equalized on an annual basis before a final judgment can be made.

(a) Calculate the ANPV for each project. Show formulas and calculations please.

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Financial Management, Finance

Category:- Financial Management
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