DISCUSS QUESTION #3 (Refer to Handouts for Chapter 11 posted in
Content)
The following TWO projects are being considered in this year's
capital budget.
PROJECT 1: Assume the Cost of Capital is 10% for this
project
cash flows
year
project
0
-34,000
1
17,000
2
15,000
3
13,000
PROJECT 2: This project has a life of 3 years. The initial
investment is $15,000 with annual cash inflows of $7,000. Assume
the Cost of Capital is 9% for this project.
REPLY...