2. a) Contrast the difference between independent projects and mutually exclusive projects. (5 marks) b) Suppose...

 

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2. a) Contrast the difference between independent projects and mutually exclusive projects. (5 marks) b) Suppose there is a discount rate of 8% a year and the cash flows of project A, B, C are given as follows: i) ii) Year 0 1 iii) 160,000 400,000 180,000 250,000 200,000 150,000 Assume that the firm has sufficient cash to meet the expenditure. Calculate the net present value of three projects. (9 marks) Which project/s should be accepted if they are independent? (4 marks) Which project/s should be accepted if they are mutually exclusive? (4 marks) Project A Project B -$500,000 -$500,000 2 3 Project C $500,000 100,000 250,000 400,000 c) Suppose the projects are financed by bank loans, would you take the interest payments into your calculations? Explain. (8 marks) 2. a) Contrast the difference between independent projects and mutually exclusive projects. (5 marks) b) Suppose there is a discount rate of 8% a year and the cash flows of project A, B, C are given as follows: i) ii) Year 0 1 iii) 160,000 400,000 180,000 250,000 200,000 150,000 Assume that the firm has sufficient cash to meet the expenditure. Calculate the net present value of three projects. (9 marks) Which project/s should be accepted if they are independent? (4 marks) Which project/s should be accepted if they are mutually exclusive? (4 marks) Project A Project B -$500,000 -$500,000 2 3 Project C $500,000 100,000 250,000 400,000 c) Suppose the projects are financed by bank loans, would you take the interest payments into your calculations? Explain. (8 marks)

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a Contrast the difference between independent projects and mutually exclusive projects Independent p... View the full answer