Question
Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Project A B C Cash Flow Today
Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Project A B C Cash Flow Today ($ millions) -5 5 16 Cash Flow in One Year ($ millions) 18 6 -11 Suppose all cash flows are certain and the risk-free interest rate is 7%. a. What is the NPV of each project? b. If the firm can choose only one of these projects, which should it choose based on the NPV decision rule? c. If the firm can choose any two of these projects, which should it choose based on the NPV decision rule? a. What is the NPV of each project? The NPV of project A is $ million. (Round to two decimal places.)
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Corporate Finance
Authors: Jonathan Berk and Peter DeMarzo
3rd edition
978-0132992473, 132992477, 978-0133097894
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