Bill Zimmerman is evaluating two new business opportunities. Each of the opportunities shown below has a 15-year
Question:
Bill Zimmerman is evaluating two new business opportunities. Each of the opportunities shown below has a 15-year life. Bill uses a 12% discount rate.
Required
a. Calculate the net present value of the two opportunities.
b. Calculate the profitability index of the two opportunities.
c. Which option should Bill choose? Why?
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a Option 1 Cash Flow Timing Amount 12 PV Factor Present Value Purchase price Year 0 ...View the full answer
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