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Kualoa Corporation is trying to assess the risk of two possible capital budgeting proposals. The company has developed pessimistic, most likely, and optimistic estimates of the annual cash inflows.  They are given in the following table. The firm's cost of capital is 10 percent. What is the range of the annual cash inflows for Project A?

Kualoa Corporation is trying to assess the risk of two possible capital budgeting proposals. The company has developed pessimistic, most likely, and optimistic estimates of the annual cash inflows.  They are given in the following table. The firm's cost of capital is 10 percent. What is the range of the annual cash inflows for Project A?

Practical Management Science
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
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Kualoa Corporation is trying to assess the risk of two possible capital budgeting proposals. The company has developed pessimistic, most likely, and optimistic estimates of the annual cash inflows.  They are given in the following table. The firm's cost of capital is 10 percent. What is the range of the annual cash inflows for Project A?

 

Project A Initial Investment Annual Cash Inflow Outcome $20,000 $5,000 Pessimistic Most likely Optimistic 10,000 15,000 Project B Initial Investment Annual Cash Inflow Outcome $100,000 $20,000 Pessimistic Most likely Optimistic 40,000 100,000
Transcribed Image Text:Project A Initial Investment Annual Cash Inflow Outcome $20,000 $5,000 Pessimistic Most likely Optimistic 10,000 15,000 Project B Initial Investment Annual Cash Inflow Outcome $100,000 $20,000 Pessimistic Most likely Optimistic 40,000 100,000
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