Dorati Inc

Multiple Choice

Dorati Inc.is considering two mutually exclusive projects.Dorati used a 15% required rate of return to evaluate capital expenditure projects.If the two projects have the costs and cash flows shown below, using a replacement chain determine the NPV for each.

Assume in two years Project S will still cost $70,000 and produce the same two years of cash flows.

A) NPVs = $8,860: NPVᴛ = $109,240
B) NPVs = $14,690: NPVᴛ = $109,240
C) NPVs = $40,020: NPVᴛ = $109,240
D) None of these