Consider the projects below. Assuming these projects are mutually exclusive , the firm has no other investment
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Question:
Consider the projects below. Assuming these projects are mutually exclusive, the firm has no other investment opportunities except fairly priced financial securities, and WACC = 12%. Which, if either, project should it invest in and why?
0 | 1 | 2 | 3 | |
Project 1: | ||||
Capital Spending | ($1,050,000) | |||
FCF | $500,000 | $500,000 | $500,000 | |
NPV | ||||
IRR | 20.2% | |||
Project 2: | ||||
Capital Spending | ($500,000) | |||
FCF | $450,000 | $250,000 | $0 | |
NPV | ||||
IRR | 28.8% |
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date: