Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You work for the 3T company, which expects to earn at least 13 percent on its investments. You have to choose between two similar projects.
You work for the 3T company, which expects to earn at least 13 percent on its investments. You have to choose between two similar projects. Below is the cash flow information for each project. Calculate the NPV of each project. (Use the NPV function in Excel to solve this problem.) Which of the two projects would you fund if the decision is based only on financial information and you could only choose one of the projects? Inflow Omega Year Inflow yo Y1 Y2 150,000 Y3 220,000 Y4 185,000 Y5 205,000 Y6 197,000 Y7 100,000 Total 1,057,000 Outflow 215,000 190,000 @ 30,000 Netflow (215,000 (190,000) 150,000 190,000 185,000 165,000 197,000 70,000 552,000 Alpha Year YO Y1 Y2 Y3 Y4 Outflow 207,000 110,000 0 30,000 0 48,000 Netflow (207,000) (110,000) 150,000 190,000 161,000 157,000 197,000 70,000 608,000 150,000 220,000 161,000 205,000 197,000 100,000 1,033,000 Y5 40,000 30,000 505,000 Y6 Y7 Total 30,000 425,000 The NPV for Omega is The NPV for Alpha is The better project is
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started