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Question Content Area There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows:   First Year Second Year Third Year Total Alpha Project $31,500   $22,500     $5,000   $59,000 Beta Project 7,000   23,000     28,000   58,000 (Click here to see present value and future value tables) A. If the discount rate is 12%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places. Alpha Project $fill in the blank 1 Beta Project $fill in the blank 2 B. Which project should be recommended.   .Please round off anwsers. Thank you

Question Content Area There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows:   First Year Second Year Third Year Total Alpha Project $31,500   $22,500     $5,000   $59,000 Beta Project 7,000   23,000     28,000   58,000 (Click here to see present value and future value tables) A. If the discount rate is 12%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places. Alpha Project $fill in the blank 1 Beta Project $fill in the blank 2 B. Which project should be recommended.   .Please round off anwsers. Thank you

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 21P
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  1. Question Content Area

    There are two projects under consideration by the Rainbow factory. Each of the projects will require an initial investment of $35,000 and is expected to generate the following cash flows:

      First Year Second Year Third Year Total
    Alpha Project $31,500   $22,500     $5,000   $59,000
    Beta Project 7,000   23,000     28,000   58,000

    (Click here to see present value and future value tables)

    A. If the discount rate is 12%, compute the NPV of each project. Round your present value factor to three decimal places and final answer to answer to 2 decimal places.

    Alpha Project $fill in the blank 1
    Beta Project $fill in the blank 2

    B. Which project should be recommended.

     

    .Please round off anwsers. Thank you

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