IntroOffice Min is considering several risk-free projects:Project Initial cash flow Cash flow in 1 yearA-8,1009,720-4,0004,200-6,5007,475BCThe risk-free interest rate is 10%.Part 1What is the NPV of project A?0+ decimalsSubmitPart 2What is the NPV of project B?0+ decimalsSubmitPart 3What is the NPV of project C?0+ decimalsSubmitPart 4Which projects should the company accept?Check all that apply:O Project CProject AProject BSubmit

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Which projects should the company accept? Check all that apply: Project C Project A Project B Submit

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter26: Real Options

Section: Chapter Questions

Problem 9SP

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Concept explainers

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.

Question

Intro
Office Min is considering several risk-free projects:
Project Initial cash flow Cash flow in 1 year
A
-8,100
9,720
-4,000
4,200
-6,500
7,475
B
C
The risk-free interest rate is 10%.
Part 1
What is the NPV of project A?
0+ decimals
Submit
Part 2
What is the NPV of project B?
0+ decimals
Submit
Part 3
What is the NPV of project C?
0+ decimals
Submit
Part 4
Which projects should the company accept?
Check all that apply:
O Project C
Project A
Project B
Submit

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