A firm has three investment opportunities that are mutually exclusive. Each costs $1,000, and the firm's...
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A firm has three investment opportunities that are mutually exclusive. Each costs $1,000, and the firm's cost of capital is 10 percent. The cash inflow for each investment is listed below. Complete the chart below and answer the following questions, be sure to INCLUDE UNITS/LABELS. a. Complete the following chart: Year 1 2 3 4 Net Present Value Internal Rate of Return Payback A $300 300 300 300 B 500 400 200 100 $100 359 400 500 b. If the net present value method is used, which investment should the firm make? c. Based on IRR, which investment should the firm make? d. Based on the payback method, which investment should the firm make? A firm has three investment opportunities that are mutually exclusive. Each costs $1,000, and the firm's cost of capital is 10 percent. The cash inflow for each investment is listed below. Complete the chart below and answer the following questions, be sure to INCLUDE UNITS/LABELS. a. Complete the following chart: Year 1 2 3 4 Net Present Value Internal Rate of Return Payback A $300 300 300 300 B 500 400 200 100 $100 359 400 500 b. If the net present value method is used, which investment should the firm make? c. Based on IRR, which investment should the firm make? d. Based on the payback method, which investment should the firm make?
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The workings are as follows a The completed chart is as below b Based ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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