You are planning to invest in three mutually exclusive investment projects, A, B and C, which have the following after-tax cash flows: Cash Flow, per year ($) Investment 0 1 2 3 4 Thereafter A (12,000) 5,000 5,000 5,000 5,000 50 B (12,000) 0 0 0 20,000 50 C (12,000) 5,000 5,000 11,000 11,000 50 Assume that your required rate of return is 6.5 percent: Apply the present-value technique to assess the acceptability of each investment.
You are planning to invest in three mutually exclusive investment projects, A, B and C, which have the following after-tax cash flows: Cash Flow, per year ($) Investment 0 1 2 3 4 Thereafter A (12,000) 5,000 5,000 5,000 5,000 50 B (12,000) 0 0 0 20,000 50 C (12,000) 5,000 5,000 11,000 11,000 50 Assume that your required rate of return is 6.5 percent: Apply the present-value technique to assess the acceptability of each investment.
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
You are planning to invest in three mutually exclusive investment projects, A, B and C, which have the following after-tax cash flows:
|
|
Cash Flow, per year ($) |
|||||
|
Investment |
0 |
1 |
2 |
3 |
4 |
Thereafter |
|
A |
(12,000) |
5,000 |
5,000 |
5,000 |
5,000 |
50 |
|
B |
(12,000) |
0 |
0 |
0 |
20,000 |
50 |
|
C |
(12,000) |
5,000 |
5,000 |
11,000 |
11,000 |
50 |
Assume that your required
- Apply the present-value technique to assess the acceptability of each investment.
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