ANZS Limited has $6 million at its disposal and the management is considering the following projects for investment. The CFO has prepared the following table
ANZS Limited has $6 million at its disposal and the management is considering the following projects for investment. The CFO has prepared the following table for the board of which you are a member.
| Project A | Project B | Project C | |
| Initial investment | $3,000,000 | $3,500,000 | $2,700,000 |
| Net present value | $5,000,000 | $3,500,000 | $5,400,000 |
| IRR | 20% | 12% | 18% |
The CFO further told the board that the company's cost of capital is 10%.
Questions:
What would be your investment decision if the projects are (a) mutually exclusive, or (b) independent?
Explain your answer in details.
Step by Step Solution
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Step: 1
A mutually exclusive project is a project where the company has to choose between two or more differ...
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Step: 2
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Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb
1st edition
132832402, 978-0132832403
