Construct NPV Profiles for these two projects.  b. If the two projects were mutually exclusive, which would you accept if your firm’s cost of capital were 4%? Which would you accept if your firm’s cost of capital were 9%?

Construct NPV Profiles for these two projects. b. If the two projects were mutually exclusive, which would you accept if your firm’s cost of capital were 4%? Which would you accept if your firm’s cost of capital were 9%?

Consider Projects A and B, with net cash flows as follows:

—- Net Cash Flows —-

Project A Project B

Initial Cost at T-0 (Now) ($20,000) ($20,000)

cash inflow at the end of year 1 10,000 6,000

cash inflow at the end of year 2 8,000 16,000

cash inflow at the end of year 3 6,000 26,000

a. Construct NPV Profiles for these two projects.

b. If the two projects were mutually exclusive, which would you accept if your firm’s cost of capital were 4%? Which would you accept if your firm’s cost of capital were 9%?



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