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Subject:
Finance
Category: Business and Money Asked by: glennis-ga List Price: $2.00 |
Posted:
20 Jun 2005 09:40 PDT
Expires: 20 Jul 2005 09:40 PDT Question ID: 535113 |
Here are the cash flows for two mutually exclusive projects: Project C0 C1 C2 C3 A ($20,000) $8,000 $8,000 $8,000 B ($20,000) 0 0 $25,000 a. At what interest rates would you prefer project A to B? 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Also, how can I compute using excel? |
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There is no answer at this time. |
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Subject:
Re: Finance
From: nh786-ga on 20 Jun 2005 12:18 PDT |
Using excel's IRR function the 2 rates project A = 9.70% and project B = 7.72% Hence if the discount rate jas to be below these 2 inorder to accept the project USing ecels's NPV function these are the present values of cash flows for each of the project. Accept the one with higher NPV for each case of interest rate Proj A Proj B 0% $4,000.00 $5,000.00 2.0% $3,071.07 $3,558.06 4.0% $2,200.73 $2,224.91 6.0% $1,384.10 $990.48 8.0% $616.78 ($154.19) 10.0% ($105.18) ($1,217.13) 12.0% ($785.35) ($2,205.49) |
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