1. Two investments have the following pattern of expected returns: Investment A Year 1 2 3...

 

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1. Two investments have the following pattern of expected returns: Investment A Year 1 2 3 4 4 (Sale) BTCF $5,000 $10,000 $12,000 $15,000 $120,000 Year 1 2 Investment B 3 4 4 (Sale) BTCF $2,000 $4,000 $1,000 $5,000 $180,000 Investment A requires an outlay of $110,000 and Investment B requires an outlay of $120,000. a. What is the BTIRR on each investment? b. If the BTIRR were partitioned based on BTCF, and BTCF, what proportions of the BTIRR would be represented by each? c. What do these proportions mean? 1. Two investments have the following pattern of expected returns: Investment A Year 1 2 3 4 4 (Sale) BTCF $5,000 $10,000 $12,000 $15,000 $120,000 Year 1 2 Investment B 3 4 4 (Sale) BTCF $2,000 $4,000 $1,000 $5,000 $180,000 Investment A requires an outlay of $110,000 and Investment B requires an outlay of $120,000. a. What is the BTIRR on each investment? b. If the BTIRR were partitioned based on BTCF, and BTCF, what proportions of the BTIRR would be represented by each? c. What do these proportions mean?

Answer rating: 100% (QA)

a To calculate the BTIRR BenefittoCost Ratio for each investment we need to divide the BTCF Benefits ... View the full answer