PRATICE QUESTION Tropical Plantation just acquired an empty land in Oahu, Hawaii, which is good to grow
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PRATICE QUESTION
Tropical Plantation just acquired an empty land in Oahu, Hawaii, which is good to grow either crop A or crop B, but not both at the same time. Given below are the cash flows associated with growing crop A and crop B. The negative cash flow in year 0 indicate initial investments. The appropriate discount rate is 15% for growing both crops.
Year | 0 | 1 | 2 | 3 | 4 |
Crop A | -100 | 40 | 50 | 62 | 0 |
Crop B | -73 | 30 | 30 | 30 | 30 |
1. The NPV of growing crop A is .
2. The NPV of growing crop B is .
3. Based on the NPV rule, Tropical Plantation should grow crop . (Answer A or B.)
4. The ROI of growing crop A is .
5. The ROI of growing crop B is .
6. Based on the ROI rule, Tropical Plantation should grow crop . (Answer A or B.)
Related Book For
Business Statistics For Contemporary Decision Making
ISBN: 978-1118749647
8th edition
Authors: Black Ken
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