Two mutually exclusive new computer models

Assignment Help Financial Management

Reference no: EM131536473

Real Time Systems Inc. is considering the development of one of two mutually exclusive new computer models. Each will require a net investment of $5,000. The cash flow figures for each project are shown below:

Period Project A Project B

1 $2,000 $3,000

2 2,500 2,600

3 2,250 2,900

Model B, which will use a new type of laser disk drive, is considered a high-risk project, while Model A is of average risk. Real Time adds 2 percentage points to arrive at a risk-adjusted cost of capital when evaluating a high-risk project. The cost of capital used for average risk projects is 12 percent. What are their NPV's?

Reference no: EM131536473

Questions Cloud

Machine which adds the most value to the firm : A small manufacturer is considering two alternative machines. If the company chooses the machine which adds the most value to the firm,

Economist steven landsburg : Economist Steven Landsburg (New York Times, January 16, 2008 p. A23) made the point that "bullying and protectionism have a lot in common.

High-risk intersections to reduce traffic accident : The City of Vernon, TX is considering installing red light cameras at high-risk intersections to reduce traffic accidents.

How much total direct labor cost is incurred in june : The computer workstation furniture manufacturing that Santana Rey started in January is progressing well. As of the end of June, Business Solutions' job cost.

Two mutually exclusive new computer models : Real Time Systems Inc. is considering the development of one of two mutually exclusive new computer models.

Professor becker corrects president math : President Clinton has seized upon the cigarette excise tax as an expedient and politically correct means of increasing federal revenue.

Evaluating construction of new plant : As the capital budgeting director for Chapel Hill Coffins Company, you are evaluating construction of a new plant.

Identify the impact on operating cash flows : Retailers as well as manufacturers can apply just-in-time (JIT) to their inventory management. Both Research In Motion and Apple want to know the impact.

What are the coupon rate and the current yield on this bond : What are the coupon rate and the current yield on this bond on the date of issue?

User Account

All Pages