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Author Question: Consider the following projects, X and Y where the firm can only choose one. Project X costs 600 and ... (Read 48 times)

kshipps

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  • Posts: 571
on: Jul 10, 2018
Consider the following projects, X and Y where the firm can only choose one. Project X costs 600 and has cash flows of 400 in each of the next 2 years.
 
  Project Y also costs 600, and generates cash flows of 500 and 275 for the next 2 years, respectively. Which investment should the firm choose if the cost of capital is 25 percent?
  A) Project X, since it has a higher NPV than Project Y
  B) Project Y, since it has a higher NPV than Project X
  C) neither, since both the projects have negative NPV
  D) neither, since both the projects have positive NPV

Question 2

Preferred stock is characterized by ________.
 
  A) voting rights
  B) maturity date
  C) quasi-debt nature
  D) preemptive rights


moormoney

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Reply #1 on: Jul 10, 2018
Answer to Question 1

C

Answer to Question 2

C


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