Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider projects A and B with the following cash flows: A B - $45 - 70 C1 +$31 + 35 C2 +$31 + 35 C3
Consider projects A and B with the following cash flows: A B - $45 - 70 C1 +$31 + 35 C2 +$31 + 35 C3 +$ 31 + 35 a-1. What is the NPV of each project if the discount rate is 15%? (Do not round intermediate calculations. Round your answers to 2 decimal places.) a-2. Which project has the higher NPV? b-1. What is the profitability index of each project? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b-2. Which project has the higher profitability index? c. Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? d. Which project is most attractive to a firm that is limited in the funds it can raise? Project A Project B $ 100.68 XS 130.36 x NPV of each project if the discount rate is 15% a- 1. a- 2. b- Which project has the higher NPV? Project B 3.24 x s 2.86 x Profitability index of each project $ b- 2. Which project has the higher profitability index? Which project is most attractive to a firm that can raise an unlimited amount of funds to pay for its investment projects? Which project is most attractive to a firm that is limited in the funds it can raise? Project A Project c. X A d. Project A
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started