Question
A firm is considering three different projects for investment. Project A will require an initial investment of $100,000 today and will generate annual cash flows
A firm is considering three different projects for investment. Project A will require an initial investment of $100,000 today and will generate annual cash flows of $25,000 for a five-year period. Project B will require an initial investment of $150,000 today will generate annual cash flows of $35,000 for a five-year period. Project C will require an initial investment of $275,000 today, and will generate a cash flow of $75,000 in the first year. Cash flows will grow by 3% per year for project C over the five-year period.
The three projects are contingent for the firm. What is the maximum cost of capital for the firm if the firm wants to invest?
Question 18 options:
9.41% | |
16.98% | |
10.19% | |
11.47% | |
13.44% |
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