Suppose a firm with a required rate of return or cost of capital of 10 percent and
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Suppose a firm with a required rate of return or cost of capital of 10 percent and with no capital constraint is considering the two mutually exclusive projects illustrated in Table 10-9. How do we solve this time-disparity problem?
Transcribed Image Text:
TABLE 10-9 The Time-Disparity Ranking Problem PROJECT A YEARS Cash Flow NPV = $758.83 PI = 1.759 IRR = 35% PROJECT B YEARS Cash Flow NPV = $616.45 PI = 1.616 IRR = 43% 0 -1,000 0 -1,000 k = 10% k = 10% 1 100 1 650 2 200 2 650 3 2,000 3 650
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Related Book For
Foundations Of Finance
ISBN: 9781292155135
9th Global Edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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