Question
Consider the following cash flows: Project Cash flow today Cash flow in one year alpha -18 23 beta 15 -12 gamma 15 -20 delta -16
Consider the following cash flows:
| Project | Cash flow today | Cash flow in one year |
| "alpha" | -18 | 23 |
| "beta" | 15 | -12 |
| "gamma" | 15 | -20 |
| "delta" | -16 | 21 |
Assume that the risk-free interest rate is 10%. Rank each of the four projects from most desirable to least desirable based upon NPV.
Required: Which project would you invest in first? Are there any projects that you wouldn't invest in?
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A First Course in Quantitative Finance
Authors: Thomas Mazzoni
1st edition
9781108411431, 978-1108419574
