Question
A corporation is considering an investment in one of two potential projects. Eachproject requires an initial investment of $6000. Project X will produce cash flows
A corporation is considering an investment in one of two potential projects. Eachproject requires an initial investment of $6000. Project X will produce cash flows of $400 at the end of each 6-month period. The cash flows are expected to continue for ever. The first cash flow is expected 6 months after the initial investment. ProjectY will have a single cash flow of $W which will be received exactly 5 years after the initial investment. The IRR on both projects is the same. Calculate the net presentvalue of Project Y, using an annual effective interest rate of 10%.
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