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Home Fabrics has three investment opportunities. Each costs $10,000. Investments B and C are mutually exclusive and the firm's cost of capital is 12 percent.
Home Fabrics has three investment opportunities. Each costs $10,000. Investments B and C are mutually exclusive and the firm's cost of capital is 12 percent. Year Investment A Investment B Investment C 1 $3,950 $- $12,410 2 3,950 3 3,950 4 17,490 a) Using the net present value method, which investment should Home Fabrics make? b) What is the internal rate of return for the investments? Which investment should be made? Is this the same answer you obtained in part a? c) If all funds are reinvested at 15 percent, which investment(s) should be made? Home Fabrics has three investment opportunities. Each costs $10,000. Investments B and C are mutually exclusive and the firm's cost of capital is 12 percent. Year Investment A Investment B Investment C 1 $3,950 $- $12,410 2 3,950 3 3,950 4 17,490 a) Using the net present value method, which investment should Home Fabrics make? b) What is the internal rate of return for the investments? Which investment should be made? Is this the same answer you obtained in part a? c) If all funds are reinvested at 15 percent, which investment(s) should be made
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