Company B is deciding which between the 2 projects should it invest in (supported by the cash flow patterns shown below). The company's cost of capital is approximately 9% but due to the current economic environment, its cost of equity may increase and may be a bit more than the approximated value. Year Project 1 Project 2 0 (initial outlay) -13 million -12 million 1 3 million 8 million 2 3 million 6 million 3 5 million 1 million 4 5 million 1 million 5 5 million 1 million calculate the NPV and IRR of both projects
Company B is deciding which between the 2 projects should it invest in (supported by the cash flow patterns shown below). The company's cost of capital is approximately 9% but due to the current economic environment, its cost of equity may increase and may be a bit more than the approximated value. Year Project 1 Project 2 0 (initial outlay) -13 million -12 million 1 3 million 8 million 2 3 million 6 million 3 5 million 1 million 4 5 million 1 million 5 5 million 1 million calculate the NPV and IRR of both projects
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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Company B is deciding which between the 2 projects should it invest in (supported by the cash flow patterns shown below). The company's cost of capital is approximately 9% but due to the current economic environment, its
Year | Project 1 | Project 2 |
0 (initial outlay) | -13 million | -12 million |
1 | 3 million | 8 million |
2 | 3 million | 6 million |
3 | 5 million | 1 million |
4 | 5 million | 1 million |
5 | 5 million | 1 million |
calculate the NPV and IRR of both projects
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