Which project has greater npv

Assignment Help Financial Management

Reference no: EM131247333

You are asked to perform a capital budgeting analysis of two projects. Both will require an immediate cash outlay of $1000. Both projects last one year and they both produce revenues at the end of the year amounting to $1500 with certainty. Cash outflows at the end of the year, however, are risky. They are given below, along with the market rate of return, Rm:

352_Tab 02.jpg

Since you are given the cash flows, there is no need to worry about taxes, depreciation, or salvage value.

Note that the cash outflows of Project B have higher variance than those of Project A. Which project has greater NPV? Show your work and explain your reasoning.

Reference no: EM131247333

Questions Cloud

Is this inconsistent with capital market efficiency : Empirical evidence indicates that mutual funds that have abnormal returns in a given year are successful in attracting abnormally large numbers of new investors the following year. Is this inconsistent with capital market efficiency?

Should electric or gas forklift trucks purchased by ramsden : Ramsden will apply a 10% discount factor for analysis of the electric trucks and a 2% differential to the gas trucks owing to their higher operating risks. The applicable tax rate is 40%. Should electric or gas forklift trucks be purchased by Rams..

Explain in detail the scope of the public health policy : Briefly describe the public health problem and the policy that addresses the problem. Examine the nature and magnitude of the problem and the people who are affected. Explain in detail the scope of the public health policy. Be sure to provide specifi..

Program to compute the sum : Write an anonymous PL/SQL program to compute the sum of 1, 3, 5, 7, 9. You must use a loop. Tip: consider how to update your loop variable - Write an anonymous PL/SQL program

Which project has greater npv : Note that the cash outflows of Project B have higher variance than those of Project A. Which project has greater NPV? Show your work and explain your reasoning.

What is the effects of counseling on the children of parents : Identify at least one example for each of the following topics that you plan to use for your research proposal due on : What is the effects of counseling on the children of parents who have a substance abuse issue?

Types of stores and other distribution channels : Give 400 words specifically on the Distribution (where sold, types of stores and other distribution channels [including any use of e-commerce], extent of availability, etc of the Apple iPhone.

Explain critical thinking : Provide an example from your personal experience of critical thinking applied to a business decision.Discuss the importance and benefits of using critical thinking.Relate the importance and benefits of critical thinking to the example provided.Dis..

Competitive aggressiveness and risk taking : Entrepreneurship has characteristics such as autonomy, innovativeness, proactiveness, competitive aggressiveness, and risk taking. How do these fit in a typical corporation?

User Account

All Pages