question archive Sheffield Inc
Sheffield Inc
Subject:FinancePrice: Bought3
Sheffield Inc. now has the following two projects available:ProjectInitial CFAfter-tax CF1After-tax CF23F
After-tax CF1-10,9734,7005,3008,4002-2,9783,2002,600
Assume that R = 3.9%, risk premium = 9.4%, and beta = 1.2. Use the chain replication approach to determine which project(s) Sheffield Inc. should choose if they are mutually exclusive. (Round cost of capital to 2 decimal places, e.g.17.35% and the final answers to 0 decimal places, e.g. 2,513.)
what is the NPV1 generated over a six-year period$
what is the NPV2 generated over a six-year period$
Project 1
Project 2
which should be chosen.
