A
firm has the following investment alternatives:
Cash
flows
|
|||
Year
|
A
|
B
|
C
|
1
|
$400
|
-
|
-
|
2
|
$400
|
$400
|
-
|
3
|
$400
|
800
|
-
|
4
|
$400
|
800
|
1,800
|
Each
investment cost 1,400 and the firm cost of capital is 10 percent.
(A)
What is each investment rate of return?
(B)
Should the firm make any of these investments?
(C)
what is each investment’s net present value?
(D)
Should the firm make any of these investments?
TUTORIAL PREVIEW
Cash flows
|
|||
Year
|
A
|
B
|
C
|
1
|
$400
|
-
|
-
|
2
|
$400
|
$400
|
-
|
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