Question
ABC plc is comparing two investment projects. The expected cash flows are given below. Assume the cost of capital is 10 per cent. A)
ABC plc is comparing two investment projects. The expected cash flows are given below. Assume the cost of capital is 10 per cent. A) Calculate the payback period, net present value, internal rate of return and the profitability index of each project. B) Which project of the two would you choose? WHY? C) Do you expect to have a multiple IRR problem? Explain D) What is the value of the cross over point, if exist? Period Project A Project B 0 ($55,000) ($50,000) 1 $10,000 $20,000 2 $25.000 $20,000 3 $25,000 $20,000 4 $1.500 $5,000
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
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