Question
Your company is considering two projects and has estimated the following cash flows: a. If project B expands your manufacturing capacity by building a separate
Your company is considering two projects and has estimated the following cash flows:
a. If project B expands your manufacturing capacity by building a separate factory, what is the relevant cash flow for evaluating project B in year 2?
b. If project B replaces an existing factory (project A), what is the relevant cash flow for evaluating project B in year 2?
c. If project B replaces an existing factory (project A), what is the relevant cash flow for evaluating project B in year 0?
| Year | Project A | Project B |
|---|---|---|
| 0 | -15,000 | -20,000 |
| 1 | 10,000 | 10,000 |
| 2 | 10,000 | 16,000 |
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
