Calculate the NPV of each project with a 4% discount rate. Which project(s) will be undertaken if all are mutually exclusive (still 4% discount)? Which project(s) will be undertaken if all are independent and the firm only has $125k in available capital (still 4% discount)? Which projects will be undertaken if all are independent and the firm’s cost of capital is 3%? Please do in Excel and show steps
Calculate the NPV of each project with a 4% discount rate. Which project(s) will be undertaken if all are mutually exclusive (still 4% discount)? Which project(s) will be undertaken if all are independent and the firm only has $125k in available capital (still 4% discount)? Which projects will be undertaken if all are independent and the firm’s cost of capital is 3%? Please do in Excel and show steps
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
- NPV and project selection
|
Project A |
Project B |
||||
|
initial investment |
-50000 |
-60000 |
|||
|
Year 1 |
5000 |
4000 |
|||
|
Year 2 |
6000 |
7000 |
|||
|
Year 3 |
7000 |
14000 |
|||
|
Year 4 |
9000 |
13000 |
|||
|
Year 5 |
4000 |
4000 |
|||
|
Year 6 |
9000 |
9000 |
|||
|
Year 7 |
5000 |
10000 |
|||
|
Year 8 |
8000 |
8000 |
|||
|
Year 9 |
9000 |
9000 |
|||
|
Year 10 |
5000 |
7000 |
- Calculate the NPV of each project with a 4% discount rate.
- Which project(s) will be undertaken if all are mutually exclusive (still 4% discount)?
- Which project(s) will be undertaken if all are independent and the firm only has $125k in available capital (still 4% discount)?
- Which projects will be undertaken if all are independent and the firm’s cost of capital is 3%?
Please do in Excel and show steps
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