Capital Budgeting
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Project S
Costs = $15,000
Cash Flow = $4500 per year for 5 years
WACC = 14%
Mutually exclusive
Project L
Costs = $37,500
Cash Flow = $11,100 per year for 5 years
WACC = 14%
Which project should be selected?
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One needs to calculate NPV for the two projects and then select the higher NPV project.
Use the following formula in Excel ...
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