Question

Consider two competing investments in computer equipment. Each calls for an initial cash outlay of $100, and each returns $200 over the next five years making for a net gain of $100. But the timing of the returns is different, as shown in the table below (Company A Limited and Company B Limited), and therefore the present value of each year's gains is different. Using a 10% discount rate compute the Net Present Value (NPV) of A Limited and B Limited and ascertain which company generates better NPV.

Answer 1

Answer:

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Explanation:

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