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BUSN 6120 HomeWork 6 Problem




Question;Homework 6Problem 1Two projects have the following NPVs and standard deviations:Project A20075NPVStandard deviationProject B300100Which of the two projects is more risky?Problem 2Your firm has an opportunity to make an investment of $50,000. Its cost of capital is 12percent. It expects after-tax cash flows (including the tax shield from depreciation) forthe next five years to be as follows:Year 1Year 2Year 3Year 4Year 5$10,000$20,000$30,000$20,000$ 5,000a. Calculate the NPV.b. Calculate the IRR (to the nearest percent)c. Would you accept this project?


Paper#55863 | Written in 18-Jul-2015

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