Question

Wilkes, Inc. must invest in a pollution-control program in order to meet federal regulations to stay in business. There are two programs available to Wilkes: an all-at-once program that will be immediately funded and implemented, and a gradual program that will be phased in over the next three years. The immediate program costs $5 million, whereas the phase-in program will cost $1 million today and $2 million per year for the following three years. If the cost of capital for Wilkes is 15%, which pollution-control program should Wilkes select?


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  • CreatedMarch 26, 2015
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