Question 2. You are a financial manager of the Cinco Company and you face a choice...

Question 2.

You are a financial manager of the Cinco Company and you face a choice between two investment opportunities: projects A and B. The projects’ cash flows are summarized in the following table:

	Year 0	Year 1	Year 2
Project A	$100	-$70	-$35
Project B	$1,000	-$600	-$500

Assume that the opportunity cost of capital is 12%.

Part (a)

What is the NPV of each project? Which project would you choose based on the NPV rule?

Part (b)

Which project would you choose based on the IRR rule?

Solutions

Expert Solution

Please upvote if the ans is helpful.In case of doubt,do comment.Thanks.

jeff jeffy answered 1 year ago

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