Question
Problem 4. Investment Rules: NPV/IRR You have two projects. Project A costs $100 today and will generate a cash flow of $120 in a year
Problem 4. Investment Rules: NPV/IRR
You have two projects. Project A costs $100 today and will generate a cash flow of $120 in a year from today. Project B costs $50 but starts a year from today, that is the initial cost is paid in a year from today and will generate a cash flow of $62 in two years from today. The opportunity cost of capital for both projects is 10%.
a. Complete the following table for the two projects (NPV and IRR as of today). NPV IRR Project A Project B
b. Which project would you choose if projects A and B are mutually exclusive (i.e., you can choose only one project) and why?
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Accounting Cases In Hong Kong The First Hksa Case Competition
Authors: HKSA Case, Monograph Work GP
1st Edition
9629370883, 978-9629370886
