Note: You are attempting question 4 out of 12 The company is considering two projects. The initial investment in the Project A and B are $50,000 and $60,000 respectively. The Project A will generate annual cash flows of $26,000 for four years and the Project B will generate annual cash flows of $30,000 for four years. What must be the required rate of return, so that the company will be indifferent between these two projects? (A) The required rate of return must be 21.86%. (B) The required rate of return must be 37.42%. (C) The required rate of return must be 34.90%. (D) The required rate of return must be 31.39%. Answer
Note: You are attempting question 4 out of 12 The company is considering two projects. The initial investment in the Project A and B are $50,000 and $60,000 respectively. The Project A will generate annual cash flows of $26,000 for four years and the Project B will generate annual cash flows of $30,000 for four years. What must be the required rate of return, so that the company will be indifferent between these two projects? (A) The required rate of return must be 21.86%. (B) The required rate of return must be 37.42%. (C) The required rate of return must be 34.90%. (D) The required rate of return must be 31.39%. Answer
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter26: Real Options
Section: Chapter Questions
Problem 9SP
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Question
Transcribed Image Text:212F4b2fdONuXXgZX2DTmgiz56EF3A
Subject Test
Note: -
You are attempting question 4 out of 12
The company is considering two projects. The initial investment in the Project A and B
are $50,000 and $60,000 respectively. The Project A will generate annual cash flows of
$26,000 for four years and the Project B will generate annual cash flows of $30,000 for
four years. What must be the required rate of return, so that the company will be
indifferent between these two projects?
(A)The required rate of return must be 21.86%.
(B) The required rate of return must be 37.42%.
(C) The required rate of return must be 34.90%.
(D)The required rate of return must be 31.39%.
Answer
O A
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