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Look at the cash flows for projects F and G given below. The cost of capital was assumed to be 10%. Assume that the forecasted
Look at the cash flows for projects F and G given below. The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 10% on average. That is, the forecast for each cash flow from each project should be reduced by 10%. But a lazy financial manager, unwilling to take the time to argue with the projects' sponsors, instructs them to use a discount rate of 20%. a. What are the projects' true NPVs? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) b. What are the NPVs at the 20% discount rate? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) Look at the cash flows for projects F and G given below. The cost of capital was assumed to be 10%. Assume that the forecasted cash flows for projects of this type are overstated by 10% on average. That is, the forecast for each cash flow from each project should be reduced by 10%. But a lazy financial manager, unwilling to take the time to argue with the projects' sponsors, instructs them to use a discount rate of 20%. a. What are the projects' true NPVs? (Do not round intermediate calculations. Round your answers to nearest dollar amount.) b. What are the NPVs at the 20% discount rate? (Do not round intermediate calculations. Round your answers to nearest dollar amount.)
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