A firm has two $1,000, mutually exclusive investment alternatives with the following cash inflows. The cost of capital is 6 percent.
$\begin{array}{cc}\text { Year }&\text { Cash Inflow }\&A&B\
1 & \$ 175 &\$1,100\
2 & 175&-- \
3 & 175 &--\
4 & 175&-- \
5 & 175&-- \
6 & 175&-- \
7 & 175 &--\
8 & 175&--
\end{array}$

a. What is the internal rate of return on each investment? Which investment should the firm make? f sales.
b. What is the net present value of each investment? Which investment should the firm make?
c. If the cash inflows can be reinvested at 8 percent, which investment should be made?

Question

A firm has two $1,000, mutually exclusive investment alternatives with the following cash inflows. The cost of capital is 6 percent.​
​ $\begin{array}{cc}\text { Year }&\text { Cash Inflow }\&A&B\
1 & \$ 175 &\$1,100\
2 & 175&-- \
3 & 175 &--\
4 & 175&-- \
5 & 175&-- \
6 & 175&-- \
7 & 175 &--\
8 & 175&--
\end{array}$
 ​ 
a. What is the internal rate of return on each investment? Which investment should the firm make? f sales.
b. What is the net present value of each investment? Which investment should the firm make?
c. If the cash inflows can be reinvested at 8 percent, which investment should be made?

Quizplus · Accepted Answer

The Answer of A firm has two $1,000, mutually exclusive investment alternatives with the following cash inflows. The cost of capital is 6 percent.​
​ $\begin{array}{cc}\text { Year }&\text { Cash Inflow }\&A&B\
1 & \$ 175 &\$1,100\
2 & 175&-- \
3 & 175 &--\
4 & 175&-- \
5 & 175&-- \
6 & 175&-- \
7 & 175 &--\
8 & 175&--
\end{array}$
 ​ 
a. What is the internal rate of return on each investment? Which investment should the firm make? f sales.
b. What is the net present value of each investment? Which investment should the firm make?
c. If the cash inflows can be reinvested at 8 percent, which investment should be made?

A Firm Has Two $1,000, Mutually Exclusive Investment Alternatives with the Following