Business, 20.12.2019 05:31 jorfos7683
Afirm is evaluating two independent projects utilizing the internal rate of return technique. project x has an initial investment of $80,000 and cash inflows at the end of each of the next five years of $25,000. project z has a initial investment of $120,000 and cash inflows at the end of each of the next four years of $40,000.
the firm should
a) accept both if the cost of capital is at most 15 percent.
b) accept only z if the cost of capital is at most 15 percent.
c) accept only x if the cost of capital is at most 15 percent.
d) none of the above
Answer from: onegirl435
If cost of capital is 15%
PROJECT X
Year Cashflow [email protected]% PV
0 (80,000) 1 (80,000)
1-5 25,000 3.3522 83,805
NPV 3,805
PROJECT Z
Year Cashflow [email protected]% PV
0 (120,000) 1 (120,000)
1-4 40,000 2.8550 114,200
NPV (5,800)
Accept project X if the cost of capital is at most 15%
The correct answer is C
Explanation:
In this case, the net present value of each project will be computed at 15% cost of capital and the project with positive net present value will be accepted.
Answer from: Quest
D. centrally planned economy hope this ! : d
Answer from: Quest
Answerlowest price a firm would have been willing to accept; price it actually receives;
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Afirm is evaluating two independent projects utilizing the internal rate of return technique. projec...
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