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: NPVT = $109,240
B) NPVs = $14,690: NPVT = $109,240
C) NPVs = $40,020: NPVT = $109,240
D) None of the above