Question
Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable.
Kosovski Company is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and are not repeatable. If the decision is made by choosing the project with the higher IRR, how much value will be forgone? Note that under some conditions choosing projects on the basis of the IRR will cause $0.00 value to be lost.
| WACC: | 6.25% |
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|
|
|
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| 0 | 1 | 2 | 3 | 4 |
| CFS | -$1,050 | $675 | $650 |
|
|
| CFL | -$1,050 | $360 | $360 | $360 | $360 |
please show full work
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Tail Risk Hedging Creating Robust Portfolios For Volatile Markets
Authors: Vineer Bhansali
1st Edition
0071791752,0071791760
