What are their npvs, The cost of capital used for average

What are their npvs

Assignment Help Financial Management

Reference no: EM132069976

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: EM132069976

Questions Cloud

What was the income from operations : If the contribution margin ratio for Ernie Company is 34%, sales were $432,000, and fixed costs were $110,160, what was the income from operations?

Is this decision to give the rebate a wise one : You don't care for classic care and would really rather buy a new Ford Explorer for $356,000. What is the net value of buying the Cadillac?

Sales mix and break-even sales new wave technology : les Mix and Break-Even Sales New Wave Technology Inc. manufactures and sells two products, MP3 players and satellite radios.

Discuss why ethical problems occurred at enron : Discuss why ethical problems occurred at Enron. What steps could have been taken to solve any of these ethical problems?

What are their npvs : The cost of capital used for average risk projects is 12 percent. What are their NPV's?

Do you believe that the requirements for a case : Do you believe that the requirements for a case to be appealed to a higher court are too lenient or stringent? Why or why not?

Explain organization policies and procedures : Explain your organization policies and procedures: -for when a change in legislation occurs

Benefits and business at ll bean and aflac case : Assignment: Benefits and Business at LL Bean and Aflac Case Read the Benefits and Business at Aflac and L.L. Bean case study.

The circumstances must exist to make this strategy : What are the reasons why the Board of Directors of a corporation might approve a stock repurchase plan?

User Account

All Pages