Consider projects Alpha and Beta: Cash Flows ($) Project C0 C1 C2 IRR (%) Alpha −384,000 247,000 268,994 22 Beta −194,000 134,000 142,000 27 The opportunity cost of capital is 8%. Suppose you can undertake Alpha or Beta, but not both. Use the IRR rule to make the choice. (Hint: What’s the incremental investment in Alpha?) Which project did you choose? multiple choice Alpha Beta
Consider projects Alpha and Beta: Cash Flows ($) Project C0 C1 C2 IRR (%) Alpha −384,000 247,000 268,994 22 Beta −194,000 134,000 142,000 27 The opportunity cost of capital is 8%. Suppose you can undertake Alpha or Beta, but not both. Use the IRR rule to make the choice. (Hint: What’s the incremental investment in Alpha?) Which project did you choose? multiple choice Alpha Beta
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 13P
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Question
Consider projects Alpha and Beta:
Cash Flows ($) | ||||
Project | C0 | C1 | C2 | |
Alpha | −384,000 | 247,000 | 268,994 | 22 |
Beta | −194,000 | 134,000 | 142,000 | 27 |
The
Which project did you choose?
multiple choice
-
Alpha
-
Beta
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