- Globex Corp Has To Choose Between Two Mutually Exclusive Projects If It Chooses Project A Globex Corp Will Have The 1 (28.34 KiB) Viewed 10 times
- Globex Corp Has To Choose Between Two Mutually Exclusive Projects If It Chooses Project A Globex Corp Will Have The 2 (23.2 KiB) Viewed 10 times
Globex Corp, has to choose between two mutually exclusive projects. If it chooses project A, Globex Corp. will have the opportunity to make a similar investment in three years. However, if it chooses project B, it will not have the opportunity to make a second investment. The following table lists the cash flows for these projects. If the firm uses the replacement chain (common life) approach, what will be the difference between the net present value (NPV) of project A and project B, assuming that both projects have a weighted average cost of capital of 14% 7 Project A Year 0: Year 1: Year 2: Year 3: $16,124 $14,227 $18,969 O $20,866 $12,330 Cash Flow -$10,000 7,000 15,000 14000 Project B Year 0: Year 1: Year 2: Year 3: Year 4: Year 5: Year 6: -$45,000 10,000 17,000 16,000 15,000 14,000 13,000
Year 2: Year 3: $16,124 $14,227 $18,969 O $20,866 $12,330 $39,606 $43,050 $30,996 $34,440 15,000 14000 $36,162 Year 2: Year 3: Year 4: Year 5: Year 6: Globex Corp, is considerină a three-year project that has a weighted average cost of capital of 10% and a NPV of $85,647. Globex Corp. can replicate this project indefinitely. What is the equivalent annual annuity (EAA) for this project? 17,000 16,000 15,000 14,000 13,000