1. Consider the following sets of investment projects: Project's Cash Flows (usd) в с 0 (2,000) (4,000) (3,000) (9,000) n A D 1 400 3,000 (2,000) 2,000 2 500 2,000 4,000 4,000 600 2,000 4,000 8,000 8,000 3 1,000 4 700 500 5 800 500 2,000 4,000 uk. Numbers in parenthesis mean that they are negative cash flows a. A company only has 6 million to spend but has the option of borrowing at most 3 million more if needed at an interest of 5% per annum, to be repaid at an equal amount every year for five years starting at the end of year 1. Which project(s) should you choose?

1. Consider the following sets of investment projects: Project's Cash Flows (usd) в с 0 (2,000) (4,000) (3,000) (9,000) n A D 1 400 3,000 (2,000) 2,000 2 500 2,000 4,000 4,000 600 2,000 4,000 8,000 8,000 3 1,000 4 700 500 5 800 500 2,000 4,000 uk. Numbers in parenthesis mean that they are negative cash flows a. A company only has 6 million to spend but has the option of borrowing at most 3 million more if needed at an interest of 5% per annum, to be repaid at an equal amount every year for five years starting at the end of year 1. Which project(s) should you choose?

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows

Section10.4: Internal Rate Of Return (irr)

Problem 2ST

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