Question
You are considering two independent projects, project A and project B. The initial cash outlay associated with project A is $50000, and the initial cash
You are considering two independent projects, project A and project B. The initial cash outlay associated with project A is $50000, and the initial cash outlay associated with project B is $70000. The required rate of return on both projects is 11 percent. The expected annual free cash inflows from each project are in the popup window: Calculate the NPV, PI, and IRR for each project and indicate if the project should be accepted.
| PROJECT A | PROJECT B | |||
| Initial Outlay | $50,000 | $70,000 | ||
| Inflow year 1 | 15,000 | 16,000 | ||
| Inflow year 2 | 15,000 | 16,000 | ||
| Inflow year 3 | 15,000 | 16,000 | ||
| Inflow year 4 | 15,000 | 16,000 | ||
| Inflow year 5 | 15,000 | 16,000 | ||
| Inflow year 6 | 15,000 | 16,000 | ||
a. What is the NPV of project A?
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Handbook On Second Lien Loans & Intercreditor Agreements
Authors: Mark N. Berman, Jo Ann J. Brighton
1st Edition
0981865593, 978-0981865591
