In: Finance
Project S requires an initial outlay at t = 0 of $20,000, and
its expected cash...
Project S requires an initial outlay at t = 0 of $20,000, and
its expected cash flows would be $4,500 per year for 5 years.
Mutually exclusive Project L requires an initial outlay at t = 0 of
$46,000, and its expected cash flows would be $13,450 per year for
5 years. If both projects have a WACC of 12%, which project would
you recommend?
Select the correct answer.
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a. Project S, since the NPVS >
NPVL. |
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b. Both Projects S and L, since both projects have IRR's >
0. |
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c. Both Projects S and L, since both projects have NPV's >
0. |
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d. Project L, since the NPVL >
NPVS. |
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e. Neither Project S nor L, since each project's NPV <
0. |
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