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A firm has three independent projects under consideration each with a required rate of return of 10%/ The total projects budget is only $2,000. Project X has an initial investment of $2,000 and a single cash flow in year one of $2,360. Project Y has an initial investment of $1,000 and a single cash flow in year one of $1,200. Project Z has an initial investment of $1,000 and a single cash flow in year one of $1,170. Calculate the IRR and NPV for each of these projects. If we assume that we cannot "repeat" these projects (i.e., we cannot do project Z twice) which project or combination of projects should the firm undertake? Why?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91234512

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