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You work for the 3T company, which expects to earn at least 14 percent on its investments. You have to choose between two similar projects. Below is the cash flow information for each project. Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Omega Year Inflow YO Outflow 0 225,000 Netflow (225,000) Alpha Year YO Inflow Outflow Netflow 0 Y1 0 190,000 (190,000) Y1 50,000 300,000 100,000 (300,000) (50,000) Y2 150,000 Ө 150,000 Y2 150,000 Ө 150,000 Y3 220,000 30,000 190,000 Y3 250,000 50,000 200,000 YA 215,000 Ө 215,000 Y4 250,000 0 250,000 Y5 205,000 30,000 175,000 Y5 200,000 50,000 150,000 Y6 197,000 0 197,000 Y6 180,000 Ө 180,000 Y7 100,000 30,000 70,000 Y7 120,000 30,000 90,000 Total 1,087,000 505,000 582,000 Total 1,200,000 530,000 670,000 The NPV for Omega is The NPV for Alpha is The better project is

You work for the 3T company, which expects to earn at least 14 percent on its investments. You have to choose between two similar projects. Below is the cash flow information for each project. Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Omega Year Inflow YO Outflow 0 225,000 Netflow (225,000) Alpha Year YO Inflow Outflow Netflow 0 Y1 0 190,000 (190,000) Y1 50,000 300,000 100,000 (300,000) (50,000) Y2 150,000 Ө 150,000 Y2 150,000 Ө 150,000 Y3 220,000 30,000 190,000 Y3 250,000 50,000 200,000 YA 215,000 Ө 215,000 Y4 250,000 0 250,000 Y5 205,000 30,000 175,000 Y5 200,000 50,000 150,000 Y6 197,000 0 197,000 Y6 180,000 Ө 180,000 Y7 100,000 30,000 70,000 Y7 120,000 30,000 90,000 Total 1,087,000 505,000 582,000 Total 1,200,000 530,000 670,000 The NPV for Omega is The NPV for Alpha is The better project is

Essentials Of Investments
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
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You work for the 3T company, which expects to earn at least 14 percent on its investments. You have to choose between two similar projects. Below is the cash flow information for each project. Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Omega Year Inflow YO Outflow 0 225,000 Netflow (225,000) Alpha Year YO Inflow Outflow Netflow 0 Y1 0 190,000 (190,000) Y1 50,000 300,000 100,000 (300,000) (50,000) Y2 150,000 Ө 150,000 Y2 150,000 Ө 150,000 Y3 220,000 30,000 190,000 Y3 250,000 50,000 200,000 YA 215,000 Ө 215,000 Y4 250,000 0 250,000 Y5 205,000 30,000 175,000 Y5 200,000 50,000 150,000 Y6 197,000 0 197,000 Y6 180,000 Ө 180,000 Y7 100,000 30,000 70,000 Y7 120,000 30,000 90,000 Total 1,087,000 505,000 582,000 Total 1,200,000 530,000 670,000 The NPV for Omega is The NPV for Alpha is The better project is
Transcribed Image Text:You work for the 3T company, which expects to earn at least 14 percent on its investments. You have to choose between two similar projects. Below is the cash flow information for each project. Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Omega Year Inflow YO Outflow 0 225,000 Netflow (225,000) Alpha Year YO Inflow Outflow Netflow 0 Y1 0 190,000 (190,000) Y1 50,000 300,000 100,000 (300,000) (50,000) Y2 150,000 Ө 150,000 Y2 150,000 Ө 150,000 Y3 220,000 30,000 190,000 Y3 250,000 50,000 200,000 YA 215,000 Ө 215,000 Y4 250,000 0 250,000 Y5 205,000 30,000 175,000 Y5 200,000 50,000 150,000 Y6 197,000 0 197,000 Y6 180,000 Ө 180,000 Y7 100,000 30,000 70,000 Y7 120,000 30,000 90,000 Total 1,087,000 505,000 582,000 Total 1,200,000 530,000 670,000 The NPV for Omega is The NPV for Alpha is The better project is
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