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Sharp Company has $15000 to invest The company is trying to decide between two alternative uses of the funds as follow Invest in Project A Invest in Project B Investment required

Sharp Company has $15,000 to invest. The company is trying to decide between two alternative uses of the funds as follows:

 

 

Invest in Project A

Invest in Project B

Investment required . . . . . . . . . . . . . . . . . . . .

$15,000

$15,000

Annual cash inflows . . . . . . . . . . . . . . . . . . . .

$4,000

$0

Single cash inflow at the end of 10 years . . . . Life of the project . . . . . . . . . . . . . . . . . . . . . .

 

10 years

$60,000

10 years

 

Sharp Company uses a 16% discount rate.

Required:

(Ignore income taxes.) Which investment would you recommend that the company accept? Show all computations using net present value. Prepare separate computations for each investment.

 

Jun 27 2020 View more View Less

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