Net Cash Flow Project A Project B -$30,000 -$15,000 1 $2,000 $10,000 $6,000 $10,000 $12,000 $10,000 $24,000 $10,000 $28,000 $5,000 3. 45

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Consider two investments with the following sequences of cash flows:

(a) Compute the i* for each investment.
(b) Plot the present-worth curve for each project on the same chart and find the interest rate that makes the two projects equivalent.
(c) If A and B are mutually exclusive investment projects, which project is more economically desirable at MARR of 15%?

Net Cash Flow
Project A
Project B
-$30,000
-$15,000
1
$2,000
$10,000
$6,000
$10,000
$12,000
$10,000
$24,000
$10,000
$28,000
$5,000
3.
45
Transcribed Image Text:Net Cash Flow Project A Project B -$30,000 -$15,000 1 $2,000 $10,000 $6,000 $10,000 $12,000 $10,000 $24,000 $10,000 $28,000 $5,000 3. 45
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