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Bottle Rocket Engineering has a weighted - average cost of capital of 1 2 . 5 4 percent. The firm is evaluating project A ,
Bottle Rocket Engineering has a weightedaverage cost of capital of percent. The firm is evaluating project A which is believed by all to have a cost of capital of percent. The project would involve an initial investment of $ an expected cash flow of $ in year and an expected cash flow of $ in year Stride Fast Mechanical has a lower weightedaverage cost of capital than Bottle Rocket Engineering. Which of the following assertions is true? The NPV of project A computed by Bottle Rocket Engineering would be less than the NPV of project A computed by Stride Fast Mechanical It is not clear whether the NPV of the project computed by Bottle Rocket Engineering would be less than, equal to or greater than the NPV of the project computed by Stride Fast Mechanical Since the expected cash flows for project A are not conventional, the NPV can not be computed The NPV of project A computed by Bottle Rocket Engineering would be equal to the NPV of project A computed by Stride Fast Mechanical The NPV of project A computed by Bottle Rocket Engineering would be greater than the NPV of project A computed by Stride Fast Mechanical
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