If the cost of capital (discount rate) is 10%, which project(s) do you invest in and why? OA. Project B- it will pay back the quickest B. Project C- it generates the greatest cash flow C. Project A- it has the highest accounting rate of return D.Project B-it has the highest net present value E. Project A- it has the highest net present value F. Project C-it has the highest profitability index

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter11: The Cost Of Capital
Section: Chapter Questions
Problem 19PROB
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QUESTION 14
You have a total of $30,000 to invest in a project and are considering the following three projects:
Cash Flows
Project A
($30,000)
$8,500
Year
Project B
($30,000)
$19,600
Project C
($30,000)
$10,400
1
$9,300
$17,300
$4,500
$10,400
$10,400
3.
$10,400
4.
$11,200
$4,200
$10,400
$12,300
$2,300
$10,400
If the cost of capital (discount rate) is 10%, which project(s) do you invest in and why?
A. Project B- it will pay back the quickest
OB. Project C- it generates the greatest cash flow
C. Project A-it has the highest accounting rate of return
D.Project B-it has the highest net present value
E. Project A- it has the highest net present value
OF. Project C- it has the highest profitability index
Transcribed Image Text:QUESTION 14 You have a total of $30,000 to invest in a project and are considering the following three projects: Cash Flows Project A ($30,000) $8,500 Year Project B ($30,000) $19,600 Project C ($30,000) $10,400 1 $9,300 $17,300 $4,500 $10,400 $10,400 3. $10,400 4. $11,200 $4,200 $10,400 $12,300 $2,300 $10,400 If the cost of capital (discount rate) is 10%, which project(s) do you invest in and why? A. Project B- it will pay back the quickest OB. Project C- it generates the greatest cash flow C. Project A-it has the highest accounting rate of return D.Project B-it has the highest net present value E. Project A- it has the highest net present value OF. Project C- it has the highest profitability index
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