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Category > Business & Finance Posted 19 May 2017 My Price 9.00

the B/C ratio of each project, using a 15% discount rate.

      1. A firm has a capital budget of $100 which must be spent on one of two projects, with any unspent balance being placed in a bank deposit earning 15%. Project A involves a present outlay of $100 and yields $321.76 after 5 years. Project B involves a present outlay of $40 and yields $92 after one year. Calculate:

        1. the IRR of each project;

        2. the B/C ratio of each project, using a 15% discount rate.

What are the project rankings on the basis of these investment decision-rules?

        1. Suppose that if Project B is undertaken its benefit can be reinvested at 17%; what project should the firm choose? Show your calculations (spreadsheet printout is acceptable as long as entries are clearly labelled).

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Status NEW Posted 19 May 2017 04:05 AM My Price 9.00

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