Question
ABC Inc. is considering investing in one or both projects Gamma and Sigma. The net cash flows for both projects are shown below: YEAR EXPECTED
ABC Inc. is considering investing in one or both projects Gamma and Sigma. The net cash flows for both projects are shown below:
| YEAR | EXPECTED NET CASH FLOW | |
|
| GAMMA | SIGMA |
| 0 | -$100 | -$100 |
| 1 | 10 | 70 |
| 2 | 60 | 50 |
| 3 | 80 | 20 |
The cost of capital based on the assessments of the projects is 10% for both.
The net present value of project Gamma is
| A. | $5.54 | |
| B. | $15.20 | |
| C. | $18.79 | |
| D. | $27.56 | |
| E. | $32.50 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started
Finance Applications And Theory
Authors: Marcia Cornett, Troy Adair, John Nofsinger
6th Edition
1264101589, 9781264101580
