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Whitley Company is considering two capital investments. Both investments have an initial cost of $ 6 , 0 0 0 , 0 0 0 and
Whitley Company is considering two capital investments. Both investments have an initial cost of $ and total net cash inflows of $ over years. Whitley requires a rate of return on this type of investment. Expected net cash inflows are as follows:
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Read the requirements.
The NPV net present value of Plan Alpha is
The NPV net present value of Plan Beta is
The IRR internal rate of return of Plan Alpha is
The IRR internal rate of return of Plan Beta is
Which plan, if any, should the company pursue?
Based on the results above, the company should pursue because the NPV is and the IRR is the company's required rate of return.
Requirement Explain the relationship between NPV and IRR. Based on this relationship and the company's required rate of return, are your answers as expected in Requirement Why or vihy not?
Based on this relationship and the company's required rate of return, are your answers as expected in Requirement Why or why not?
The NPV net present value of Plan Alpha is $
The NPV net present value of Plan Beta is $
The IRR internal rate of return of Plan Alpha is
The IRR internal rate of return of Plan Beta is
Which plan, if any, should the company pursue?
A The company should not pursue either plan because the NPV is negative and the IRR is less than the company's required rate of return for both plans.
D The company should not pursue either plan because the NPV is positive and the IRR is greater than the company's required rate of return for both plans.
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