Consider projects Alpha and Beta: Cash Flows ($) C₁ Co C₂ Project Alpha -385,000 246,000 272,995 22 Beta -195,000 133,500 147,000 28 IRR (8) The opportunity cost of capital is 8%. Suppose you can undertake Alpha or Beta, but not both. Use the IRR rule to make the choice. (Hint: What's the incremental investment in Alpha?) Which project did you choose? Which project did you choose?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Consider projects Alpha and Beta:
Cash Flows ($)
C₁
Co
Project
Alpha -385,000 246,000 272,995
Beta -195,000 133,500 147,000 28
IRR
( 8 )
Which project did you choose?
22
The opportunity cost of capital is 8%. Suppose you can undertake Alpha or Beta, but not both. Use the IRR rule to make the choice.
(Hint: What's the incremental investment in Alpha?)
Which project did you choose?
Transcribed Image Text:Consider projects Alpha and Beta: Cash Flows ($) C₁ Co Project Alpha -385,000 246,000 272,995 Beta -195,000 133,500 147,000 28 IRR ( 8 ) Which project did you choose? 22 The opportunity cost of capital is 8%. Suppose you can undertake Alpha or Beta, but not both. Use the IRR rule to make the choice. (Hint: What's the incremental investment in Alpha?) Which project did you choose?
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