The cost of capital is 10 and project m has a three-year


(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: The cost of capital is 10 and project m has a three-year
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