What is the internal rate of return for the two investments

Reference no: EM13288478

The cost of capital for a firm is 10 percent. The firm has two possible investments with the following cash inflows:

Years A B
1 $300 $200
2 $200 $200
3 $100 $200

a. Each investment costs $480. What investment(s) should the firm make according to net present value?

b. What is the internal rate of return for the two investments? Which investment(s) should the firm make? Is this the same answer you obtained in part a?

c. If the cost of capital rises to 14 percent, which investment(s) should the firm make?

Reference no: EM13288478

Questions Cloud

Organisations may need to hold inventories : 1.Identify key reasons that organisations may need to hold inventories

Explain ethyl bromide and hydroxide ion : The reaction between ethyl bromide (C2H5Br) and hydroxide ion in ethyl alcohol at 330 K, C2H5BR(alc) + OH-(alc) --> C2H5OH(l) + Br-(alc), is first order each in ethyl bromide and hydroxide ion.

Find the change in the diffraction angle : A 3.00-kHz tone is being produced by a speaker with a diameter of 0.160 m. find the change in the diffraction angle

What is the cost of equity : The Chicken Coup Restaurant is expected to pay an annual dividend of $2.20 a share next year. The company recently announced that future dividends will increase by 2.8 percent annually. The current market price is $33.60 a share. What is the cost ..

What is the internal rate of return for the two investments : What is the internal rate of return for the two investments? Which investment(s) should the firm make? Is this the same answer you obtained in part a?

Determine the range of values of alpha : three forces are applied to a bracket as shown. determine the range of values of alpha for which the magnitude of the resultant forces acting on a is less than 600n

State the complete and balanced equation : What is the complete and balanced equation for and please let me know if in any of them there is no reaction. KCl+PbCH3COO? CrBr2+AgNO3? NaOH+FeCl3

Evaluate the resistance of the wire : A wire is made of a material with a resistivity of 4.84004 × 10 ?8 ? · m. evaluate the resistance of the wire

What is the intrinsic price per share : The financial statements of Lioi Steel Fabricators are shown below-both the actual results for 2010 and the projections for 2011. Free cash flow is expected to grow at a 6% rate after 2011. The weighted average cost of capital is 11%.

User Account

All Pages