An analyst has gathered the following data about a
company with a 12 percent cost of capital.
Project A
Project B
Initial cost
$15000
$20000
Life
5years
4years
Cash inflows
$5000/year
$7500/year
单选题
If the projects are independent, the company should: A. accept both projects. B. accept project A and reject project B. C. reject project A and accept project B.
【正确答案】
A
【答案解析】 Independent projects accept all with + NPV or IRR ＞ cost of capital,
NPVA) = 3024 ( NPV computation is easy-treat cash flows as an
annuity→N = 5; I=12 ; PMT = 5000 ; FV = 0 ; CPT PV =18024→NPV = 18024 - 15000
=3024), NPVB = 2780 (NPV-treat cash flows as an annuity, N = 4 ; I =
12 ; PMT = 7500 ; FV = 0 ; CPT PV = 22780→NPV = 22780 - 20000 = 2780).
单选题
If the projects are mutually exclusive, the company should: A. accept both projects. B. accept A and reject B. C. reject A and accept B.