Assume that you are considering two projects which are mutually exclusive. Project X3 will cost $400,000 and

Question:

Assume that you are considering two projects which are mutually exclusive. Project X3 will cost $400,000 and will return $200,000 per year for three years. Project Y6 will cost $300,000 and will return to you $100,000 per year for six years. If your cost of capital is 9%, which project should you choose?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...