Question: You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects.
You work for the 3T company, which expects to earn at least 18 percent on its investments. You have to choose between two similar projects. Below is the cash information for each project. Your analysts predict that inflation rate will be a stable 3 percent over the next 7 years. Which of the two projects would you fund if the decision is based only on financial information?Why?
.png)
Omega Year Alpha Inflow Outflow Netflow Year Inflow Outflow Netflow 0 $300,000 300,000 S 50,000 100,000 50,000 150,000 200,000 0 250,000 50,000 150,000 180,000 90,000 Total 1,087,000 505,000 5,000 Total 1,200,000 530,000 670,000 0 $225,000 225,000 Yo 0 190,000 90,000 Y1 150,000 Y2 Y1 150,000 250,000 250,000 200,000 180,000 120,000 $150,000 220,000 30,000 190,0 215,000 205,000 30,000 175,0 197,000 100,000 30,000 50,000 215,000 Y4 Y6 197,000 Y6 70,000 Y7 30,000
Step by Step Solution
3.32 Rating (158 Votes )
There are 3 Steps involved in it
A B C D E F G H I J 1 2 3 Net Present Value Example Comparing Two Projects 4 5 Project Omega Year 0 ... View full answer
Get step-by-step solutions from verified subject matter experts
Document Format (1 attachment)
177-B-M-L-P-M (1293).docx
120 KBs Word File
