FUNDAMENTALS OF FINANCE(LL)
FUNDAMENTALS OF FINANCE(LL)
9th Edition
ISBN: 9781260477184
Author: BREALEY
Publisher: MCGRAW-HILL CUSTOM PUBLISHING
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Chapter 8, Problem 1QP

Chapter 8, Problem 1QP, <x-custom-btb-me data-me-id='2572' class='microExplainerHighlight'>IRR</x-custom-btb-me>/<x-custom-btb-me data-me-id='2575' class='microExplainerHighlight'>NPV</x-custom-btb-me>. If the <x-custom-btb-me data-me-id='2278' class='microExplainerHighlight'>opportunity cost</x-custom-btb-me> of capital is 11%. Which of these projects is worth pursuing?

IRR/NPV. If the opportunity cost of capital is 11%. Which of these projects is worth pursuing?

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Summary Introduction

To find: The project that is worth pursuing if the opportunity cost of capital is 11%.

Explanation of Solution

Computation of the project that is worth continuing:

FUNDAMENTALS OF FINANCE(LL), Chapter 8, Problem 1QP , additional homework tip  1

Thus both the projects are worth pursuing as they are with a positive net present value.

Excel calculations:

FUNDAMENTALS OF FINANCE(LL), Chapter 8, Problem 1QP , additional homework tip  2

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