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Your firm is subject to capital rationing and can only invest $60,000. You've estimated the following cash flows (in $) for two projects: Year Project
Your firm is subject to capital rationing and can only invest $60,000. You've estimated the following cash flows (in $) for two projects:
Year | Project A | Project B |
0 | -54,000 | -54,000 |
1 | 10,000 | 30,000 |
2 | 20,000 | 20,000 |
3 | 30,000 | 10,000 |
4 | 40,000 | 0 |
The required return for both projects is 8%.
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Intro Your firm is subject to capital rationing and can only invest $60,000. You've estimated the following cash flows (in $) for two projects: Year Project A Project B 0 -54,000 -54,000 1 10,000 30,000 2 20,000 20,000 3 30,000 10,000 4 40,000 0 The required return for both projects is 8%. Attempt 1/6 for 10 pts. Part 1 What is the payback period for project A? 2+ decimals Submit B Attempt 1/6 for 10 pts. Part 2 What is the payback period for project B? 2+ decimals Submit Part 3 | Attempt 1/5 for 10 pts. Which project seems better according to the payback method? Project B Project A Submit Attempt 1/6 for 10 pts. Part 4 What is the NPV for project A? 0+ decimals Submit Attempt 1/6 for 10 pts. Part 5 What is the NPV for project B? 0+ decimals Submit Part 6 6 | Attempt 1/5 for 10 pts. Which project seems better according to the NPV method? Project B Project A Submit Part 7 IB Attempt 1/5 for 10 pts. Compare the answers to parts 3 and 6. If both projects are mutually exclusive, which one should you accept? Project B Project A Submit
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