Question
1. Consider the two following mutually-exclusive projects Year Project A Project B 0 - $100 -$100 1 20 40 2 50 45 3 70 50
1. Consider the two following mutually-exclusive projects
Year Project A Project B
0 - $100 -$100
1 20 40
2 50 45
3 70 50
If the firms cost of capital is 11%, which project(s) should you accept and why?
A) Project A because it has a higher IRR.
B) Project A because it has a higher NPV.
C) Project B because it has a higher NPV.
D) Project B because it has a higher payback
2. What is the NPV for a project costing $250,000 today and providing a net cash inflow of $89,000 annually for 4 years at an opportunity cost of capital of 9% per annum?
A) 12,577
B) 22,625
C) 29,333
D) 38,335
E) 288,335
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