Question
Royal Enterprises has estimated cash flows for the following two projects. At what cost of capital would the firm be indifferent between the two projects
Royal Enterprises has estimated cash flows for the following two projects. At what cost of capital would the firm be indifferent between the two projects (i.e., the projects would be equally desirable)?
| YEAR | Project A | Project B |
| 0 | -$90,000 | -$90,000 |
| 1 | $40,000 | $33,000 |
| 2 | $38,000 | $37,000 |
| 3 | $36,000 | $39,000 |
| 4 | $34,000 | $43,000 |
Group of answer choices
15.75%
16.25%
16.55%
16.75%
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Managing Cash Flow An Operational Focus
Authors: Rob Reider, Peter B. Heyler
1st Edition
0471228095, 9780471228097
