A firm is considering three possible one-year investments, which we will name X, Y, and Z. Investment
Question:
A firm is considering three possible one-year investments, which we will name X, Y, and Z.
- Investment X would cost $10 million now and would return $11 million next year, for a net gain of $1 million.
- Investment Y would cost $100 million now and would return $105 million next year, for a net gain of $5 million.
- Investment Z would cost $1 million now and would return $1.2 million next year, for a net gain of $200,000.
The firm currently has $150 million of cash on hand that it can loan out at 15 percent interest. Which of the three possible investments should it undertake?
a. X only.
b. Y only.
c. Z only.
d. X and Y.
e. X and Z.
f. X, Y, and Z.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Microeconomics Principles, Problems and Policies
ISBN: 978-1259450242
20th edition
Authors: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn
Question Posted: