Question
As a finance teacher, show me how the question get EAB1 = $1.88 m, EAB2 = $2.88 m as the answer. A firm has two
As a finance teacher, show me how the question get EAB1 = $1.88 m, EAB2 = $2.88 m as the answer.
A firm has two projects under consideration, and it can select only one. The first has an initial outlay of $55.00 million and a six-year life. After-tax net cash flows are -$8.00 million in year 1, $12.00 million in year 2, and $24.00 million in each of the remaining four years. The second project has a nine-year life and an initial outlay of $63.00 million. After-tax net cash flow in year 1 is - $5.00 million, and after that it is $18.00 million per year. The cost of capital is 11.0%. Which, if either, project should be taken?
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