5.42 Consider the following two investment alternatives: Project's Cash Flow Al A2 -$15,000 -$25,000 1 9,500 2 12,500 7,500 PW(15%) ? 9,300 The firm's MARR is known to be 15%. (a) Compute PW(15%) for A1. (b) Compute the unknown cash flow X in years 2 and 3 for A2. (c) Compute the project balance (at 15%) of A1 at the end of period 3. (d) If these two projects are mutually exclusive alternatives, which one would you select?

5.42 Consider the following two investment alternatives: Project's Cash Flow Al A2 -$15,000 -$25,000 1 9,500 2 12,500 7,500 PW(15%) ? 9,300 The firm's MARR is known to be 15%. (a) Compute PW(15%) for A1. (b) Compute the unknown cash flow X in years 2 and 3 for A2. (c) Compute the project balance (at 15%) of A1 at the end of period 3. (d) If these two projects are mutually exclusive alternatives, which one would you select?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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