A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000 and a 10% cost of capital. Their cash flows follow: Year c 1 $10,000 $50,000 $25,000 o 2 20,000 40,000 25,000 3 30,000 30,000 25,000 45,000 4 40,000 o 25,000 55,000 5 50,000 o 25,000 60,000 (i) Calculate each project's Payback Period (ii) Calculate each project's Net Present Value (NPV) (iii) Which project should the finn accept under each technique?
A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000 and a 10% cost of capital. Their cash flows follow: Year c 1 $10,000 $50,000 $25,000 o 2 20,000 40,000 25,000 3 30,000 30,000 25,000 45,000 4 40,000 o 25,000 55,000 5 50,000 o 25,000 60,000 (i) Calculate each project's Payback Period (ii) Calculate each project's Net Present Value (NPV) (iii) Which project should the finn accept under each technique?
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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Ouestnon 4 A&B Enterprises is trying to select the best investment from among four alternatives. Each alternative involves an initial outlay of $100,000 and a 10% cost of capital. Their cash flows follow: Year c 1 $10,000 $50,000 $25,000 o 2 20,000 40,000 25,000 3 30,000 30,000 25,000 45,000 4 40,000 o 25,000 55,000 5 50,000 o 25,000 60,000 (i) Calculate each project's Payback Period (ii) Calculate each project's
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