Imagine you are investing $100,000 into a project A. MARR is 15% This investment will bring you the following positive cash flows: Year 1: $31,000 Year 2: $31,000 Year 3: $31,000 Year 4: $31,000 Year 5: $31,000 a.Find the future worth of the investment b.You found another mutually exclusive alternative B that requires you to invest an additional $20,000 compared to investment A. It will bring $36,500 of net annual income for 5 years. Is this alternative better than the original one? Use incremental analysis to evaluate them. c.What are the IRRs of alternative A and alternative B? Please calculate with formula.
Imagine you are investing $100,000 into a project A. MARR is 15% This investment will bring you the following positive cash flows: Year 1: $31,000 Year 2: $31,000 Year 3: $31,000 Year 4: $31,000 Year 5: $31,000 a.Find the future worth of the investment b.You found another mutually exclusive alternative B that requires you to invest an additional $20,000 compared to investment A. It will bring $36,500 of net annual income for 5 years. Is this alternative better than the original one? Use incremental analysis to evaluate them. c.What are the IRRs of alternative A and alternative B? Please calculate with formula.
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 21P
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Imagine you are investing $100,000 into a project A. MARR is 15%
This investment will bring you the following positive cash flows:
Year 1: $31,000
Year 2: $31,000
Year 3: $31,000
Year 4: $31,000
Year 5: $31,000
a.Find the future worth of the investment
b.You found another mutually exclusive alternative B that requires you to invest an additional $20,000 compared to investment A. It will bring $36,500 of net annual income for 5 years. Is this alternative better than the original one? Use incremental analysis to evaluate them.
c.What are the
Please calculate with formula.
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