Question
The table below provides estimates of future cash flows for a set of four projects. The initial cost of each project is $25,000. The firm
The table below provides estimates of future cash flows for a set of four projects. The initial cost of each project is $25,000. The firm currently uses a common discount rate of 12% for all projects and the firms required payback period is 2.5 years.
| Project | Project Life | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 |
| A | 3 years | $10,000 | $10,000 | $11,000 | ||
| B | 4 years | $8,000 | $11,000 | $13,000 | $2,000 | |
| C | 4 years | $11,000 | $7,000 | $12,000 | $4,000 | |
| D | 5 years | $7,000 | $13,000 | $8,000 | $5,000 | $2,000 |
If only project can be accepted, which should it be?
A. Project A
B. Project B
C Project C
D. Project D
please show work
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Bond Markets Analysis And Strategies
Authors: Frank J. Fabozzi
4th Edition
0130402664, 9780130402660
