2. A firm is evaluating two projects. The firm's cost of capital (appropriate discount rate)has been determined to be 9%, and the projects have the fllowing initial investmentsand cash flows:Project QProject YP 50 000P 20 000Initial Investment:P 48 000Cash Flows:1P 30 000225 00035 000315 00040 000420 00010 000Which project should the company pursue? Why?

NPV = Present value of cashinflows - Present value of cash outlay.

Answered: hich project should the company pursue?…

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hich project should the company pursue? Why?

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)

10th Edition

ISBN:9781337902571

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter11: The Basics Of Capital Budgeting

Section: Chapter Questions

Problem 11P: CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS Project S requires an initial outlay at t =...

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Question

2. A firm is evaluating two projects. The firm's cost of capital (appropriate discount rate)
has been determined to be 9%, and the projects have the fllowing initial investments
and cash flows:
Project Q
Project Y
P 50 000
P 20 000
Initial Investment:
P 48 000
Cash Flows:
1
P 30 000
2
25 000
35 000
3
15 000
40 000
4
20 000
10 000
Which project should the company pursue? Why?

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