Evaluating two mutually exclusive projects

Assignment Help Financial Management

Reference no: EM131601866

Ace Inc. is evaluating two mutually exclusive projects—Project A and Project B. The initial cash outflow is $50,000 for each project. Project A results in cash inflows of $15,625 at the end of each of the next five years. Project B results in one cash inflow of $99,500 at the end of the fifth year. The required rate of return of Ace Inc. is 10 percent. Ace Inc. should invest in:

Project B because it has a higher net present value (NPV).

Project A because it will generate cash in the initial years of its life.

Project B because it has no cash inflows in the first four years of its life.

Project A because it has a positive net present value (NPV).

Project A because it will yield cash every year for five years.

Reference no: EM131601866

Questions Cloud

Define use of the convenience sampling : The use of a convenience sampling in organisational research is correct because all members share the same organisational stimuli and go through.

Project management for developing the system : Project Management for developing the system, changes to business processes, and Implementation/Conversion Plan (Organization)

How to assess country potential through an analysis of risks : Case Scenario: In the year 2010, 5 business graduates of Southern Cross University came together to pursue their dream of starting a new business.

How can multicultural competence be an ethical issue : How can multicultural competence be an ethical issue as it relates to professional standards regarding competence to practice?

Evaluating two mutually exclusive projects : Ace Inc. is evaluating two mutually exclusive projects—Project A and Project B. The initial cash outflow is $50,000 for each project.

Described the theoretical framework as a rainbow arc : Described the theoretical framework as a rainbow arc, bridging the dependent and independent variables to provide an overarching explanation of how

Type of savings incentives exist that entice personal saving : What types of savings incentives exist that entice personal saving?

Create your own phrase for a properly-formatted level : Create your own phrase for a properly-formatted level one heading for each question so as to be clear about which item you are answering.

Advise mary regarding her contract with charles : LAW FOR NEW ZEALAND BUSINESS - LAWS541 - Determine whether this is a valid contract regarding the sale of the pottery collection

User Account

All Pages