Question
. Farrah Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of
. Farrah Corporation is considering two projects (see below). For your analysis, assume these projects are mutually exclusive with a required rate of return of 12%.
Project 1 Project 2
Initial investment $185,000 $1,100,000
Cash inflow Year 1 $230,000 $1,450,000
Compute the following for each project:
NPV (net present value)
PI (profitability index)
IRR (internal rate of return)
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Modern Portfolio Theory and Investment Analysis
Authors: Edwin Elton, Martin Gruber, Stephen Brown, William Goetzmann
9th edition
9781118805800, 1118469941, 1118805801, 978-1118469941
