Your company is considering two mutually exclusive projects, Project A and Project B. The cash flows from the projects are summarized below: Year Project A Project B 0 -$100,000 -$150,000 1 $25,000 $30,000 2 $25,000 $40,000 3 $45,000 $50,000 4 $55,000 $60,000 5 $60,000 $105,000 The two projects have the same risk. Determine at what cost of capital the two projects would have the same net present value (NPV). O 11.20% O 7.37% 5.18% 9.36% 13.12%
Your company is considering two mutually exclusive projects, Project A and Project B. The cash flows from the projects are summarized below: Year Project A Project B 0 -$100,000 -$150,000 1 $25,000 $30,000 2 $25,000 $40,000 3 $45,000 $50,000 4 $55,000 $60,000 5 $60,000 $105,000 The two projects have the same risk. Determine at what cost of capital the two projects would have the same net present value (NPV). O 11.20% O 7.37% 5.18% 9.36% 13.12%
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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Transcribed Image Text:Your company is considering two mutually exclusive projects, Project A and Project B. The
cash flows from the projects are summarized below:
Year
Project A
Project B
0
-$100,000
-$150,000
1
$25,000
$30,000
2
$25,000
$40,000
3
$45,000
$50,000
4
$55,000
$60,000
5
$60,000
$105,000
The two projects have the same risk. Determine at what cost of capital the two projects
would have the same net present value (NPV).
O 11.20%
O 7.37%
5.18%
9.36%
13.12%
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