Chapter 10 Problem 23 Build a Model help

# Chapter 10 Problem 23 Build a Model help - Chapter 10 P23...

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Chapter 10 P23 Build a Model Expected Net Cash Flows Time Project A Project B 0 (\$375) (\$575) 1 (\$300) \$190 2 (\$200) \$190 3 (\$100) \$190 4 \$600 \$190 5 \$600 \$190 6 \$926 \$190 7 (\$200) \$0 @ 12% cost of capital @ 18% cost of capital WACC = 12% WACC = 18% b. Construct NPV profiles for Projects A and B. Project A Project B \$0.00 \$0.00 0% \$0.00 \$0.00 2% \$0.00 \$0.00 4% \$0.00 \$0.00 6% \$0.00 \$0.00 8% \$0.00 \$0.00 10% \$0.00 \$0.00 12% \$0.00 \$0.00 14% \$0.00 \$0.00 16% \$0.00 \$0.00 18% \$0.00 \$0.00 20% \$0.00 \$0.00 22% \$0.00 \$0.00 Gardial Fisheries is considering two mutually exclusive investments. The projects' expected net cash flows are as follows: a. If each project's cost of capital is 12%, which project should be selected? If the cost of capital is 18%, what project is the proper choice? Use Excel's NPV function as explained in this chapter's Tool Kit. Note that the range does not include the costs, which are added separately. NPV

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## This note was uploaded on 02/02/2011 for the course FINC 350 taught by Professor Johnson during the Spring '11 term at UCLA.

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Chapter 10 Problem 23 Build a Model help - Chapter 10 P23...

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