1 you are faced with two projects a and b project a has, Ask an Expert

Finance

1. You are faced with two projects, A and B. Project A has future free cash flows of $1,000 in year one that grow at 3% thereafter forever. Project B has future free cash flows of $250 in year one that grows at 5% thereafter forever. Which project do you invest in, A or B? Assume projects have the same cost and the discount rate is 10%.

2. A project costs $50,000, will be depreciated straight line to zero over its 3 year life, and will require a net working capital investment of $10,000 up front and get it back in the end. The project generates OCF of $30,000. The fixed assets sold for $8,000 at the end of the project. If the firm has a tax rate of 35% and a required return of 12%, what is the project NPV?

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Financial Management, Finance

Category:- Financial Management
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