Question

In: Finance

Firm ABC is considering Projects S and L, whose cash flows are shown below. These projects...

Firm ABC is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable.

WACC:

8.75%

Year

0

1

2

3

4

CFS

−$1,100

375

375

375

375

CFL

−$2,200

725

725

725

725

Q1. NPV of project S and project L

Q2. IRR of project S and project L

Q3. MIRR of project S and project L

Q4. If the decision is made by choosing the project with the higher MIRR rather than the one with the higher NPV, how much value will be forgone?

Solutions

Expert Solution

jeff jeffy answered 1 year ago
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