23. Assume the following three mutually exclusive projects, each requiring an initial outlay of $10,000, have the following after-tax cash flow streams: Year 1 2 3 Project 1 $0 $2,500 $10,000 Project 2 $2,000 $2,000 $8,000 Project 3 $4,000 $4,000 $4,000 Which project should be undertaken if the cost of capital is 8%? What if the cost of capital is 10%?

23. Assume the following three mutually exclusive projects, each requiring an initial outlay of $10,000, have the following after-tax cash flow streams: Year 1 2 3 Project 1 $0 $2,500 $10,000 Project 2 $2,000 $2,000 $8,000 Project 3 $4,000 $4,000 $4,000 Which project should be undertaken if the cost of capital is 8%? What if the cost of capital is 10%?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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