PROBLEMS

$11-7$

CAPITAL BUDGETING CRITERIA.

A firm with a $14\%$ WACC is evaluating two projects for this year's capital budget. After$-$tax cash flows, including depreciation, are as follows:

$\backslash$table$[[,$Year $0,$Year $1,$Year $2,$Year $3,$Year $4,$Year $5],[$Project A$,-$$$6,000,$$$2\mathrm{.}000,$$$2\mathrm{.}000,$$$2\mathrm{.}000,$$$2\mathrm{.}000,$$$2\mathrm{.}000$