2. 13 FB Company is considering investing in two construction projects, and he developed the following estimates of the cash flows. His required return is 10% and views these nswered ut of projects as equally risky. Project 1 cash flows -$550,000 Project 2 cash flows -%24700,000 uestion Year $150,000 1. 000'000 $150,000 $150,000 000'000 $150,000 000'osz$ 4 000'OST$ 000'OST$ 000'00T$ Required: a) Calculate the net present value (NPV) of each project, assess its acceptability, and indicate which project is best using NPV. b) Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using Pl. c) If both the projects have recorded a positive NPV value and the projects are mutually exclusive, which projects would you recommend for FB Company to undertake? Why? 謝 近 0 N
2. 13 FB Company is considering investing in two construction projects, and he developed the following estimates of the cash flows. His required return is 10% and views these nswered ut of projects as equally risky. Project 1 cash flows -$550,000 Project 2 cash flows -%24700,000 uestion Year $150,000 1. 000'000 $150,000 $150,000 000'000 $150,000 000'osz$ 4 000'OST$ 000'OST$ 000'00T$ Required: a) Calculate the net present value (NPV) of each project, assess its acceptability, and indicate which project is best using NPV. b) Calculate the profitability index (PI) of each project, assess its acceptability, and indicate which project is best using Pl. c) If both the projects have recorded a positive NPV value and the projects are mutually exclusive, which projects would you recommend for FB Company to undertake? Why? 謝 近 0 N
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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Question
Transcribed Image Text:2.
13
FB Company is considering investing in two construction
projects, and he developed the following estimates of the
cash flows. His required return is 10% and views these
nswered
ut of
projects as equally risky.
Project 1 cash flows
-$550,000
Project 2 cash flows
-%24700,000
uestion
Year
$150,000
1.
000'000
$150,000
$150,000
000'000
$150,000
000'osz$
4
000'OST$
000'OST$
000'00T$
Required:
a) Calculate the net present value (NPV) of each project,
assess its acceptability, and indicate which project is best
using NPV.
b) Calculate the profitability index (PI) of each project,
assess its acceptability, and indicate which project is best
using Pl.
c) If both the projects have recorded a positive NPV value
and the projects are mutually exclusive, which projects
would you recommend for FB Company to undertake?
Why?
謝
近 0
N
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