The table below provides the estimated end-of-year net cash flows that would be received from alternative...
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The table below provides the estimated end-of-year net cash flows that would be received from alternative projects Red and Blue for an investment of $200,000. Project Red Project Blue Year 1 $40,000 $90,000 Year 2 $60,000 $70,000 Year 3 $80,000 $50,000 (a) Find the NPV of each project if the cost of capital is 4.5%. (b) In part (a), which project is better? (c) Find the NPV of each project if the cost of capital is 6.5%. (d) In part (c), which project is better? Year 4 $68,000 $30,000 The table below provides the estimated end-of-year net cash flows that would be received from alternative projects Red and Blue for an investment of $200,000. Project Red Project Blue Year 1 $40,000 $90,000 Year 2 $60,000 $70,000 Year 3 $80,000 $50,000 (a) Find the NPV of each project if the cost of capital is 4.5%. (b) In part (a), which project is better? (c) Find the NPV of each project if the cost of capital is 6.5%. (d) In part (c), which project is better? Year 4 $68,000 $30,000
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Answer rating: 100% (QA)
Project Red Net present value 45 Year 1 400000957 38280 Year 2 600000916 54960 Year 3 800000876 7008... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
Posted Date:
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