20 Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time 0 Project A Cash Flow Project B Cash Flow I 1 2 -38,000 28,000 48,000 -48,000 28,000 38,000 Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected? 19,000 68,000
20 Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively. Time 0 Project A Cash Flow Project B Cash Flow I 1 2 -38,000 28,000 48,000 -48,000 28,000 38,000 Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected? 19,000 68,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:20
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of
return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback
statistic for the projects are 2 and 3 years, respectively.
0
2
1
-38,000 28,000 48,000
-48,000 28,000 38,000
Time
Project A Cash Flow
Project B Cash Flow
Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected?
19,000
68,000
Transcribed Image Text:20
Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of
return on projects of both of their risk class is 11 percent, and that the maximum allowable payback and discounted payback
statistic for the projects are 2 and 3 years, respectively.
0
2
1
-38,000 28,000 48,000
-48,000 28,000 38,000
Time
Project A Cash Flow
Project B Cash Flow
Use the NPV decision rule to evaluate these projects; which one(s) should be accepted or rejected?
19,000
68,000
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