Joy Products has two projects, which are mutually exclusive. The cash flows will be: Year Cash flow
Question:
Joy Products has two projects, which are mutually exclusive. The cash flows will be:
Year Cash flow (A) Cash flow (B)
0 ‒ $80,000 ‒ $80,000
1 $60,000 $10,000
2 $30,000 $15,000
3 $20,000 $22,000
4 $10,000 $40,000
5 $5,000 $60,000
(a) If the discount rate is 8%, which project should be adopted?
(b) If the discount rate is 15%, which project should be adopted?
Corporate Finance A Focused Approach
ISBN: 978-1439078082
4th Edition
Authors: Michael C. Ehrhardt, Eugene F. Brigham