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Thomas Company is considering two mutually exclusive projects. The​ firm, which has a cost of capital of 8​%, has estimated its cash flows as shown in the following​ table attached:     a.  Calculate the NPV of each​ project, and assess its acceptability.   b.  Calculate the IRR for each​ project, and assess its acceptability

Thomas Company is considering two mutually exclusive projects. The​ firm, which has a cost of capital of 8​%, has estimated its cash flows as shown in the following​ table attached:     a.  Calculate the NPV of each​ project, and assess its acceptability.   b.  Calculate the IRR for each​ project, and assess its acceptability

Essentials Of Investments
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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Thomas Company is considering two mutually exclusive projects. The​ firm, which has a cost of capital of 8​%, has estimated its cash flows as shown in the following​ table attached:
 
 
a.  Calculate the NPV of each​ project, and assess its acceptability.
 
b.  Calculate the IRR for each​ project, and assess its acceptability.
(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Project A Project B Initial investment $140,000 $89,000 (CF,) Year (t) Cash inflows (CF,) 1 $15,000 $45,000 $25,000 $50,000 2 $25,000 3 $15,000 $60,000 $65,000 $25,000 $25,000 Print Done
Transcribed Image Text:(Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Project A Project B Initial investment $140,000 $89,000 (CF,) Year (t) Cash inflows (CF,) 1 $15,000 $45,000 $25,000 $50,000 2 $25,000 3 $15,000 $60,000 $65,000 $25,000 $25,000 Print Done
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