Question
Consider projects Alpha and Beta: Cash Flows ($) Project C 0 C 1 C 2 IRR (%) Alpha 384,000 247,000 268,994 22 Beta 194,000 134,000
Consider projects Alpha and Beta:
| Cash Flows ($) | ||||
| Project | C0 | C1 | C2 | IRR (%) |
| Alpha | 384,000 | 247,000 | 268,994 | 22 |
| Beta | 194,000 | 134,000 | 142,000 | 27 |
The opportunity cost of capital is 8%. Suppose you can undertake Alpha or Beta, but not both. Use the IRR rule to make the choice. (Hint: Whats the incremental investment in Alpha?) Which project did you choose? Multiple choice
a) Beta
b) Alpha
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Behavioral Finance And Wealth Management
Authors: Michael M. Pompian
2nd Edition
1118014324, 978-1118014325
