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
Related questions
Question

Transcribed Image Text:Consider projects Alpha and Beta:
Project
CO
C1
C2
IRR
Alpha
-400,000
241,000
293,000
21
21
Beta
-200,000
131,000
172,000
31
The opportunity cost of capital is 8%. Suppose you ca ndertake Alpha or Beta, but not both. Use the IRR to make the choice
and explain why.
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