28. You are considering the following two mutually exclusive projects. The required return on eachproject is 15 percent. Which project should you accept and what is the best reason for thatdecision?YearProject AProject B-$15,000-$30,00015,00012,0006,00011,0007,00010,0008,0009,000Select one:O a. A. Project A; because it pays back fasterO b. D. Project A; because it has the higher net present valuec. E. Project B; because it has the higher net present valueO d. B. Project A; because it has the higher internal rate of returne. C. Project B; because it has the higher internal rate of return

NPV can be calculated by following function in excel =NPV(rate,value1,[value2],…) + Initial…

You are considering the following two mutually exclusive projects. The required return on each project is 15 percent. Which project should you accept and what is the best reason for that decision? Year Project A Project B -$15,000 -$30,000 1 5,000 12,000 6,000 11,000 3 7,000 10,000 4 8,000 9,000

You are considering the following two mutually exclusive projects. The required return on each project is 15 percent. Which project should you accept and what is the best reason for that decision? Year Project A Project B -$15,000 -$30,000 1 5,000 12,000 6,000 11,000 3 7,000 10,000 4 8,000 9,000

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You are considering the following two mutually exclusive projects. The required rate of return is 11.25% for project A and 10.75% for project B. Which project should you accept? YEAR PROJECT A PROJECT B 0 -$48,000 -$126,900 1 $18,400 $69.700 2 $31,300 $80,900 3 $11,700 $0
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Consider the following two mutually exclusive projects: Cash Flow (A) $-300,000 20,000 50,000 50,000 Cash Flow (B) $-40,000 19,000 12,000 18,000 10,500 Year 2 3 4 390,000 Whichever project you choose, if any, you require 15 percent return on your investment. a) If you apply the payback criterion, which investment will you choose? Why? b) If you apply the NPV criterion, which investment will you choose? Why? c) If you apply the IRR criterion, which investment will you choose? Why? d) If you apply the profitability index, which investment will you choose? Why?

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