Question
Your firm has identified three potential investment projects. The projects and their cash flows are shown here: Project CashFlow Today (Millions) Cash Flow in One
Your firm has identified three potential investment projects. The projects and their cash flows are shown here:
Project CashFlow Today (Millions) Cash Flow in One Year (Millions)
A -$11 $21
B $2 $7
C $20 -$15
Suppose all cash flows are certain and the risk-free interest rate is 12%.
a. What is the NPV of each project?
b. If the firm can choose only one of these projects, which should it choose?
c. If the firm can choose any two of these projects, which should it choose?
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Handbook Of The Fundamentals Of Financial Decision Making
Authors: Leonard C MacLean, William T Ziemba
1st Edition
9814417343, 978-9814417341
