(Answered) 1 should the firm accept the independent projects described

Management Studies

1. Should the firm accept the independent projects described below? Why or why not?

a. The firm's cost of capital is 10 percent and the estimated internal rate of return (IRR) of the project is 11 percent.

b. A capital investment requires a $150,000 initial investment. The firm's cost of capital is 10 per- cent, and the present value of the expected cash inflows from the project is $148,000.

2. How would the capital-budgeting procedures of a firm that chooses to "build" differ from those used by a firm that chooses to "harvest"? Why might they differ?

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