Assignment: Module 5 Homework ssigment Scone Questions 13. 14 O 15 ave Submit As

Question

Assignment: Module 5 Homework ssigment Scone Questions 13. 14 O 15 ave Submit Assignment for Gradi Question 15 of 20 Check My Work (3 remaining) Problem 11.10 Click here to read the eBook: Net Present Value (NPV) CAPITAL BUDGETING CRITERIA: MUTUALLY EXCLUSIVE PROJECTS 16. 17 18. A firm with a wACC of 10% is considering the following mutually exclusive projects: Project 1 $250 $45 $45$45 $215 $215 Project 2 $600 $200 $200 $50 $50 $50 20 O Which project would you recommend? Select the correct answer. a.Both Projects 1 and 2, since both projects have NPVs> o. b. Project 1, since the NPV>NPV2 ?c.Neither Project 1 nor 2, since each project's NPV NPV Check My Work (3 remaining) esc F4 4 6

Explanation / Answer

The correct answer is (e) as, NPV is greater in Project 2. The negative value is due to the formula in excel.

0 1 2 3 4 5 Project 1 -250 45 45 45 215 215 NPV ? -22.32 0 1 2 3 4 5 Project 2 -600 200 200 50 50 50 NPV ? -52.74

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