Question
Farmer Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and repeatable. Please use
Farmer Co. is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and repeatable. Please use the replacement chain approach to compare the two projects and make your capital budgetting recommendation. (Please use the formula approach to solve this problem)
| r = | 10.25% | ||||
| Year | 0 | 1 | 2 | 3 | 4 |
| CFS | $950 | $500 | $800 |
|
|
| CFL | $2,100 | $400 | $800 | $800 | $1,000 |
please use written formulas and not an excel approach.
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Risk Sharing Finance
Authors: Bakkali Mirakhor, Saad Abbas
1st Edition
3110590468, 978-3110590463
