Question
Oldguy Inc. is considering two independent investments with the following cash flow streams: initial Year 1 Year 2 Year 3 Year 4 Year 5 Proj
Oldguy Inc. is considering two independent investments with the following cash flow streams:
| initial | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | |
| Proj A | -50,000 | +20,000 | +20,000 | +10,000 | +5,000 | +5,000 |
| Proj B | -50,000 | +10,000 | +10,000 | +5,000 | +5,000 | +50,000 |
Oldguy uses a combination of NPV and Payback period to evaluate alternatives, with a requirement of a positive NPV using a 10% discount rate and a maximum payback of 3 years. Which project(s) should Oldguy select?
| a. | A and B | |
| b. | A only | |
| c. | neither A nor B | |
| d. | B only |
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Investing In Mortgage Backed And Asset Backed Securities
Authors: Glenn M. Schultz, Frank J. Fabozzi
1st Edition
1118944003, 978-1118944004
