Consider two projects: A) with casháows in years 0-4 of -300$, 120$, 120$, 120$ and respectively 120$, B) with casháows in years 0-3 of -300$, 150$, 150$ and respectively 150$(a) Assume an opportunity cost of capital of 11%. Which of these projects would you accept, if you use the NPV method?(b) Which one would you prefer, among the two, based on their ProÖtability Index (PI)?(c) Which one would you choose if the cost of capital is 16%?

Net Present Value is the difference in the present value of Cash Inflow and Cash Outflow…

Answered: a) Assume an opportunity cost of…

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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Consider two projects: A) with casháows in years 0-4 of -300$, 120$, 120$, 120$ and respectively 120$, B) with casháows in years 0-3 of -300$, 150$, 150$ and respectively 150$

(a) Assume an opportunity cost of capital of 11%. Which of these projects would you accept, if you use the NPV method?
(b) Which one would you prefer, among the two, based on their ProÖtability Index (PI)?
(c) Which one would you choose if the cost of capital is 16%?

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