Please provide clear workout and correct solution. Greatly Appreciated! Suppose you have $10,000 to invest in one of the following projects.Project Alpha requires an initial outlay of $10,000 and yields $12,000 in two years'time.Project Beta requires an outlay of $10,000 and yields $5,750 in the next year and$5,750 the year afterThe cost of funds available is 5% compounded annually.Using the above information, answer the following questions:a) Calculate the net present value for both projects. Answer to the nearest centb) Find the internal rate of return for both projects. Answer as a percent todecimals.c) Which of these projects you would choose to invest in and why?

To determine the net present value, we need to discount each cash flow to PV using the formula…

Answered: a) Calculate the net present value for…

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter27: Investment, The Capital Market, And The Wealth Of Nations

Section: Chapter Questions

Problem 9CQ

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Please provide clear workout and correct solution. Greatly Appreciated!

Suppose you have $10,000 to invest in one of the following projects.
Project Alpha requires an initial outlay of $10,000 and yields $12,000 in two years'
time.
Project Beta requires an outlay of $10,000 and yields $5,750 in the next year and
$5,750 the year after
The cost of funds available is 5% compounded annually.
Using the above information, answer the following questions:
a) Calculate the net present value for both projects. Answer to the nearest cent
b) Find the internal rate of return for both projects. Answer as a percent to
decimals.
c) Which of these projects you would choose to invest in and why?

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I was told that the NPV alpha and IRR alpha is correct. but I was also told that project alpha has a higher internal rate of return and higher and present value. Is there many mistakes, within the workout?

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Why is it -1000 at NVP (Beta), not -10000

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