Q.1. Three mutually exclusive investment alternatives are under consideration. The initial capital outlays and the pattern of the net annual cash benefits (revenues - expenses) for each alternatives...


Q.1. Three mutually exclusive investment alternatives are under consideration. The initial capital outlays and the pattern of the net annual cash benefits (revenues -  expenses) for each alternatives are presented in the following table. Based on NPV analysis, if the company’s minimum acceptable rate of return is 10%, which alternative should be the best economic choice? Use appropriate IRR analysis to double-check your selection.










































Investment, M$





A



B



C



Initial cost



 -$200



 -$350



 -$500



Net Revenues, year 1 to 3



  $80



  $105



  $85



Net Revenues, year 4



  $60



  $90



  $150



Net Revenues, year 5



  $40



  $80



  $250




Jun 07, 2022
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