Year 0 1 2 3 4 5 Initial investment (3,500) Cash-in from operating 200 220 240 260 300 Cash-in from liquidation 5,200 Q1.1. Should you invest into the project if your opportunity cost of capital is 20

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 13P
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The project shows the cash flows as the following:
Year
0
1
2
3
4
5
Initial investment
(3,500)
Cash-in from operating
200
220 240 260
300
Cash-in from liquidation
5,200
Q1.1. Should you invest into the project if your opportunity cost of capital is 20%?
Q1.2. Should you invest into the project if your opportunity cost of capital is 10%?
Q1.3. Please give your comments on the problems.
Transcribed Image Text:The project shows the cash flows as the following: Year 0 1 2 3 4 5 Initial investment (3,500) Cash-in from operating 200 220 240 260 300 Cash-in from liquidation 5,200 Q1.1. Should you invest into the project if your opportunity cost of capital is 20%? Q1.2. Should you invest into the project if your opportunity cost of capital is 10%? Q1.3. Please give your comments on the problems.
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