Investment Option "South" This potential investment is less risky and shorter term, so it has a minimum rate of return of 8.60%. This investment would require an initial outlay of cash of $105,500, and at the end of the 5-year life of this investment INA Corporation is expected to have to pay a wind-down cost of $5,273. For the first 4 years of this investment, net annual cash inflows are expected to be $36,500 and for the last year of the investment, the net annual cash inflow is expected to be $91,250.
Investment Option "South" This potential investment is less risky and shorter term, so it has a minimum rate of return of 8.60%. This investment would require an initial outlay of cash of $105,500, and at the end of the 5-year life of this investment INA Corporation is expected to have to pay a wind-down cost of $5,273. For the first 4 years of this investment, net annual cash inflows are expected to be $36,500 and for the last year of the investment, the net annual cash inflow is expected to be $91,250.
Chapter11: Capital Budgeting And Risk
Section: Chapter Questions
Problem 20P
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