Table 11.10
Nico Manufacturing is considering investment in one of two mutually exclusive projects X and Y which are described below.Nico Manufacturing's overall cost of capital is 15 percent,the market return is 15 percent and the risk-free rate is 5 percent.Nico estimates that the beta for project X is 1.20 and the beta for project Y is 1.40.
-Calculate the NPV of projects X and Y assuming that the firm did not employ the RADR method and instead used the firm's overall cost of capital to evaluate projects X and Y.(See Table 11.10)

Question

Table 11.10
Nico Manufacturing is considering investment in one of two mutually exclusive projects X and Y which are described below.Nico Manufacturing's overall cost of capital is 15 percent,the market return is 15 percent and the risk-free rate is 5 percent.Nico estimates that the beta for project X is 1.20 and the beta for project Y is 1.40. 
-Calculate the NPV of projects X and Y assuming that the firm did not employ the RADR method and instead used the firm's overall cost of capital to evaluate projects X and Y.(See Table 11.10)

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The Answer of Table 11.10
Nico Manufacturing is considering investment in one of two mutually exclusive projects X and Y which are described below.Nico Manufacturing's overall cost of capital is 15 percent,the market return is 15 percent and the risk-free rate is 5 percent.Nico estimates that the beta for project X is 1.20 and the beta for project Y is 1.40. 
-Calculate the NPV of projects X and Y assuming that the firm did not employ the RADR method and instead used the firm's overall cost of capital to evaluate projects X and Y.(See Table 11.10)

Table 11.10 Nico Manufacturing Is Considering Investment in One of Two Mutually