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You work for the 3T company, which expects to earn at least 15 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 YO Alpha Inflow 0 Y1 0 Outflow 216,000 200,000 Netflow (216,000) Year YO Inflow Outflow Netflow 0 208,000 (208,000) (200,000) Y1 0 120,000 (120,000) Y2 150,000 0 150,000 Y2 150,000 0 150,000 Y3 220,000 30,000 190,000 Y3 220,000 30,000 190,000 Y4 188,000 0 188,000 Y4 164,000 0 164,000 Y5 205,000 39,000 166,000 Y5 205,000 47,000 158,000 Y6 197,000 0 197,000 Y6 197,000 0 197,000 Y7 100,000 30,000 70,000 Y7 100,000 30,000 70,000 Total 1,060,000 515,000 545,000 Total 1,036,000 435,000 601,000 The NPV for Omega is The NPV for Alpha is The better project is W

You work for the 3T company, which expects to earn at least 15 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 YO Alpha Inflow 0 Y1 0 Outflow 216,000 200,000 Netflow (216,000) Year YO Inflow Outflow Netflow 0 208,000 (208,000) (200,000) Y1 0 120,000 (120,000) Y2 150,000 0 150,000 Y2 150,000 0 150,000 Y3 220,000 30,000 190,000 Y3 220,000 30,000 190,000 Y4 188,000 0 188,000 Y4 164,000 0 164,000 Y5 205,000 39,000 166,000 Y5 205,000 47,000 158,000 Y6 197,000 0 197,000 Y6 197,000 0 197,000 Y7 100,000 30,000 70,000 Y7 100,000 30,000 70,000 Total 1,060,000 515,000 545,000 Total 1,036,000 435,000 601,000 The NPV for Omega is The NPV for Alpha is The better project is W

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 15 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 YO Alpha Inflow 0 Y1 0 Outflow 216,000 200,000 Netflow (216,000) Year YO Inflow Outflow Netflow 0 208,000 (208,000) (200,000) Y1 0 120,000 (120,000) Y2 150,000 0 150,000 Y2 150,000 0 150,000 Y3 220,000 30,000 190,000 Y3 220,000 30,000 190,000 Y4 188,000 0 188,000 Y4 164,000 0 164,000 Y5 205,000 39,000 166,000 Y5 205,000 47,000 158,000 Y6 197,000 0 197,000 Y6 197,000 0 197,000 Y7 100,000 30,000 70,000 Y7 100,000 30,000 70,000 Total 1,060,000 515,000 545,000 Total 1,036,000 435,000 601,000 The NPV for Omega is The NPV for Alpha is The better project is W
Transcribed Image Text:You work for the 3T company, which expects to earn at least 15 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 YO Alpha Inflow 0 Y1 0 Outflow 216,000 200,000 Netflow (216,000) Year YO Inflow Outflow Netflow 0 208,000 (208,000) (200,000) Y1 0 120,000 (120,000) Y2 150,000 0 150,000 Y2 150,000 0 150,000 Y3 220,000 30,000 190,000 Y3 220,000 30,000 190,000 Y4 188,000 0 188,000 Y4 164,000 0 164,000 Y5 205,000 39,000 166,000 Y5 205,000 47,000 158,000 Y6 197,000 0 197,000 Y6 197,000 0 197,000 Y7 100,000 30,000 70,000 Y7 100,000 30,000 70,000 Total 1,060,000 515,000 545,000 Total 1,036,000 435,000 601,000 The NPV for Omega is The NPV for Alpha is The better project is W
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