Note: Only Excell sheet submission will be graded. 1. Three mutually exclusive investment alternatives are under consideration. The initial capital outlays and the pattern of the net annual cash benefits (revenues - expenses) for each alternative are presented in the following table. Based on NPV analysis, if the company's minimum acceptable rate of return is 10%, which alternative should be the best economic choice? Use appropriate IRR analysis to double-check your selection. Investment, M$ A B C Initial cost -$200 -$350 -$500 Net revenue, year 1 to 3 $80 $105 $85 Net revenue, year 4 $60 $90 $150 Net revenue, year 5 $40 $80 $250
Note: Only Excell sheet submission will be graded. 1. Three mutually exclusive investment alternatives are under consideration. The initial capital outlays and the pattern of the net annual cash benefits (revenues - expenses) for each alternative are presented in the following table. Based on NPV analysis, if the company's minimum acceptable rate of return is 10%, which alternative should be the best economic choice? Use appropriate IRR analysis to double-check your selection. Investment, M$ A B C Initial cost -$200 -$350 -$500 Net revenue, year 1 to 3 $80 $105 $85 Net revenue, year 4 $60 $90 $150 Net revenue, year 5 $40 $80 $250
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Note: Only Excell sheet submission will be graded.
1. Three mutually exclusive investment alternatives are under consideration.
The initial capital outlays and the pattern of the net annual cash benefits
(revenues - expenses) for each alternative are presented in the following
table. Based on NPV analysis, if the company's minimum acceptable rate of
return is 10%, which alternative should be the best economic choice? Use
appropriate IRR analysis to double-check your selection.
Investment, M$
A
B
Initial cost
-$200
-$350
-$500
Net revenue, year 1 to 3
$80
$105
$85
Net revenue, year 4
$60
$90
$150
Net revenue, year 5
$40
$80
$250
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