Do the following problems. You must show your work. b) Find the IRR of the following projects and make your decision. Assume that the projects' cost of capital (or WACC) is 5%. Project X that costs $800 million is expected to generate $60m per year for 18 years. Is this project acceptable?Project Y that costs $100 million is expected to generate $22m per year for 7 years. Is this project acceptable?
Do the following problems. You must show your work. b) Find the IRR of the following projects and make your decision. Assume that the projects' cost of capital (or WACC) is 5%. Project X that costs $800 million is expected to generate $60m per year for 18 years. Is this project acceptable?Project Y that costs $100 million is expected to generate $22m per year for 7 years. Is this project acceptable?
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 1P
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Do the following problems. You must show your work.
b) Find the
Project X that costs $800 million is expected to generate $60m per year for 18 years. Is this project acceptable?
Project Y that costs $100 million is expected to generate $22m per year for 7 years. Is this project acceptable?
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