Question
Colorado Springs Technology must choose between two methods of producing a new product. The initial costs and year-end cash flow are as follows: Year 0
Colorado Springs Technology must choose between two methods of producing a new
product. The initial costs and year-end cash flow are as follows:
| Year | 0 | 1 | 2 | 3 | 4 | 5 |
| Method A | --$1,000,000 | 210,000 | 250,000 | 300,000 | 525,000 | 600,000 |
| Method B | --$1,000,000 | 410,000 | 375,000 | 475,000 | 225,000 | 195,000 |
The companys WACC is 10 percent. Calculate the NPV and IRR for each alternative.
What would be the future value of each projects cash flows assuming the firm could reinvest cash flows at the IRR of each project?
What would be the future value of each projects cash flows assuming the firm could reinvest cash flows at the firms WACC.
What is the present value of the future value (part c) using the WACC as the discount rate. What does this tell us in terms of reinvestment assumptions?
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Banking Reforms And Monetary Policy In The Peoples Republic Of China
Authors: Yong Guo
1st Edition
1403900787,1403914540
