Project A has an internal rate of return of 10%. Project B costs £100 this year and will generate a cash flow of £105 next year. The two projects are not mutually exclusive. 1. The company should only undertake project A 2. If the appropriate discount rate is below 10%, the company should invest in both projects 3. If the appropriate discount rate is above 5% the company should invest in both projects 4. If the appropriate discount rate is above 5%, the company should not undertake project B
Project A has an internal rate of return of 10%. Project B costs £100 this year and will generate a cash flow of £105 next year. The two projects are not mutually exclusive. 1. The company should only undertake project A 2. If the appropriate discount rate is below 10%, the company should invest in both projects 3. If the appropriate discount rate is above 5% the company should invest in both projects 4. If the appropriate discount rate is above 5%, the company should not undertake project B
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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Project A has an
1. The company should only undertake project A
2. If the appropriate discount rate is below 10%, the company should invest in both projects
3. If the appropriate discount rate is above 5% the company should invest in both projects
4. If the appropriate discount rate is above 5%, the company should not undertake project B
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