Net present value. Lepton Industries has three potential projects, all with an initial cost of $2,300,000. The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project Lepton should accept. Cash Flow Project Q Project R Project S Year 1 $600,000 $800,000 $1,200,000 Year 2 $600,000 $800,000 $1,000,000 Year 3 $600,000 $800,000 $800,000 Year 4 $600,000 $800,000 $600,000 Year 5 $600,000 $800,000 $400,000 Discount rate 9% 11% 16%
Net present value. Lepton Industries has three potential projects, all with an initial cost of $2,300,000. The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project Lepton should accept. Cash Flow Project Q Project R Project S Year 1 $600,000 $800,000 $1,200,000 Year 2 $600,000 $800,000 $1,000,000 Year 3 $600,000 $800,000 $800,000 Year 4 $600,000 $800,000 $600,000 Year 5 $600,000 $800,000 $400,000 Discount rate 9% 11% 16%
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
value.
Lepton Industries has three potential projects, all with an initial cost of
$2,300,000.
The capital budget for the year will allow Lepton to accept only one of the three projects. Given the discount rate and the future cash flow of each project, determine which project Lepton should accept.|
Cash Flow
|
Project Q
|
Project R
|
Project S
|
|
||
|
Year 1
|
$600,000
|
|
$800,000
|
|
$1,200,000
|
|
|
Year 2
|
$600,000
|
|
$800,000
|
|
$1,000,000
|
|
|
Year 3
|
$600,000
|
|
$800,000
|
|
$800,000
|
|
|
Year 4
|
$600,000
|
|
$800,000
|
|
$600,000
|
|
|
Year 5
|
$600,000
|
|
$800,000
|
|
$400,000
|
|
|
Discount rate
|
9%
|
11%
|
16%
|
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