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The cash flows for two investment projects are as given in Table P6.20. (a) For project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i (b) For A to be preferred over project B, determine the minimum acceptable value of X in year 2 at i 15%. %3D 12% based on an AE criterion. TABLE P6.20 Project's Cash Flow 11 B -$4,500 $6,500 1 $1,000 -$1,400 -$1,400 3 $1,000 -$1,400 $1,000 -%241,400

The cash flows for two investment projects are as given in Table P6.20. (a) For project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i (b) For A to be preferred over project B, determine the minimum acceptable value of X in year 2 at i 15%. %3D 12% based on an AE criterion. TABLE P6.20 Project's Cash Flow 11 B -$4,500 $6,500 1 $1,000 -$1,400 -$1,400 3 $1,000 -$1,400 $1,000 -%241,400

EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter10: Capital Budgeting: Decision Criteria And Real Option
Section: Chapter Questions
Problem 21P
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6.20 The cash flows for two investment projects are as given in Table P6.20. (a) For project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i = (b) For A to be preferred over project B, determine the minimum acceptable value of X in year 2 at i 15%. 12% based on an AE criterion. TABLE P6.20 Project's Cash Flow B 01 -$4,500 $6,500 $1,000 -$1,400 2 -$1,400 3 $1,000 -$1,400 $1,000 -%$1,400
Transcribed Image Text:6.20 The cash flows for two investment projects are as given in Table P6.20. (a) For project A, find the value of X that makes the equivalent annual receipts equal the equivalent annual disbursement at i = (b) For A to be preferred over project B, determine the minimum acceptable value of X in year 2 at i 15%. 12% based on an AE criterion. TABLE P6.20 Project's Cash Flow B 01 -$4,500 $6,500 $1,000 -$1,400 2 -$1,400 3 $1,000 -$1,400 $1,000 -%$1,400
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