2. A firm is evaluating two projects. The firm's cost of capital (appropriate discount rate) has been determined to be 9%, and the projects have the following initial investments and cash flows: Project Q P 50 000 Project Y P 48 000 Initial Investment: Cash Flows: 1 P 20 000 P 30 000 2 25 000 35 000 3 15 000 40 000 4 20 000 10 000 Which project should the company pursue? Why
2. A firm is evaluating two projects. The firm's cost of capital (appropriate discount rate) has been determined to be 9%, and the projects have the following initial investments and cash flows: Project Q P 50 000 Project Y P 48 000 Initial Investment: Cash Flows: 1 P 20 000 P 30 000 2 25 000 35 000 3 15 000 40 000 4 20 000 10 000 Which project should the company pursue? Why
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 7P
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