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## Finance

 Basic Finance Corporate Finance Financial Management Financial Econometrics Portfolio Management Risk Management Public Finance Business Law & Ethics

problem: Klott Corporation has a weighted average cost of capital of 11% for projects of average risk. Projects of below average risk have a cost of capital of 9%, while projects of above average risk have a cost of capital equal to 13%. Projects A & B are mutually exclusive, whereas all other projects are independent. None of the projects will be repeated. The given table summarizes the cash flows, internal rate of return (IRR), & risk of each of the projects.

 Year (t) Project A Project B Project C Project D Project E 0 (\$200,000) (\$100,000) (\$100,000) (\$100,000) (\$100,000) 1 66,000 30,000 30,000 30,000 40,000 2 66,000 30,000 30,000 30,000 25,000 3 66,000 40,000 30,000 40,000 30,000 4 66,000 40,000 40,000 50,000 35,000

Determine which projects will the firm select for investment?

Basic Finance, Finance

• Category:- Basic Finance
• Reference No.:- M918154

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