Answer:
$-2.38 million
$1.40 million
Step-by-step explanation:
Present value is the sum of discounted cash flows
Present value can be calculated using a financial calculator
Project 1
cash flow in year 1 = 9 million
cash flow in year 2 = 5 million
i = 8%
pv = 12.6
12.6 - 15 = -2.38
Project 2
cash flow in year 1 = 10 million
cash flow in year 2 = 6 million
i = 8%
pv = 14.40
14,40 - 13 = 1.40
To find the PV using a financial calculator:
1. Input the cash flow values by pressing the CF button. After inputting the value, press enter and the arrow facing a downward direction.
2. after inputting all the cash flows, press the NPV button, input the value for I, press enter and the arrow facing a downward direction.