Question
Barkley Company is deciding between two mutually exclusive projects, Projects Small and Big. The projects have the following projected cash flows: Year Project Small Cash
Barkley Company is deciding between two mutually exclusive projects, Projects Small and Big. The projects have the following projected cash flows:
| Year | Project Small Cash Flow | Project Big Cash Flow |
| 0 | -$300,000 | -$2,000,000 |
| 1 | $270,000 | $1,600,000 |
| 2 | $100,000 | $800,000 |
| 3 | $150,000 | $400,000 |
Barkley Companys cost of capital is 12%. Which project should it select? What is the better projects IRR?
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Derivatives Markets
Authors: Robert McDonald
3rd Edition
978-9332536746, 9789332536746
