A firm has the following investment alternatives. Each one lasts a year. C Investment A Cash inflow Cash outflow $1,017 $900 B 666 600 702 600 The firm's cost of capital is 7 percent. A and B are mutually exclusive, and B and C are mutually exclusive. a. What is the net present value of investment A? Investment B? Investment C? Use a minus sign to enter negative values, if any. Round your answers to the nearest cent. A: $ B: $ C: $ b. What is the internal rate on investment A? Investment B? Investment C? Round your answers to the nearest whole number. A: % B: C: % c. Which investment(s) should the firm make?
A firm has the following investment alternatives. Each one lasts a year. C Investment A Cash inflow Cash outflow $1,017 $900 B 666 600 702 600 The firm's cost of capital is 7 percent. A and B are mutually exclusive, and B and C are mutually exclusive. a. What is the net present value of investment A? Investment B? Investment C? Use a minus sign to enter negative values, if any. Round your answers to the nearest cent. A: $ B: $ C: $ b. What is the internal rate on investment A? Investment B? Investment C? Round your answers to the nearest whole number. A: % B: C: % c. Which investment(s) should the firm make?
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:A firm has the following investment alternatives. Each one lasts a year.
в
666
Investment
Cash inflow
A
$1,017
$900
C
702
Cash outflow
600
600
The firm's cost of capital is 7 percent. A and B are mutually exclusive, and B and C are mutually
exclusive.
a. What is the net present value of investment A? Investment B? Investment C? Use a minus sign
to enter negative values, if any. Round your answers to the nearest cent.
A: $
B: $
C: $ 1
b. What is the internal rate on investment A? Investment B? Investment C? Round your answers
to the nearest whole number.
A:1
%
B:
%
С:
%
c. Which investment(s) should the firm make?
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