Here are the cash-flow forecasts for two mutually exclusive projects: a. Which project would you choose if

Question:

Here are the cash-flow forecasts for two mutually exclusive projects:

a. Which project would you choose if the opportunity cost of capital is 2%?
b. Which would you choose if the opportunity cost of capital is 12%?
c. Why does your answer change?

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...