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
One factory identified three mutually exclusive investment proposals. The life of the three is estimated at 5 years with a negligible residual value, and with a MARR equal to 9% per year.
| proposals | Investment ($ million) | Annual Net Income($ million) | MARR (%) |
| A1 | 5 | 1,3 | 9,43 |
| A2 | 7 | 1,9 | 11,13 |
| A3 | 8,5 | 2,3 | 11,0 |
Which investment should be selected according to the following methods:
a) IRR-
b)
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