A firm is considering Projects S and L, whose cash flows are sho

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1. A firm is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method. You were hired to advise the firm on the best procedure. If the wrong decision criterion is used, how much potential value would the firm lose?

WACC: 6.00%

Year 0 1 2 3 4

CFS -$1,025$380 $380$380 $380 CFL -$2,150 $765$765 $765$765

a. $188.68 b.$198.61

c. $209.07 d.$219.52

e. $230.49 1 Answer Answered by 2 years ago 380.4k points Verified Expert Answer -- Instant Download Thumbnail of first page Excerpt from file: 5. A firm is considering Projects S and L, whose cash flows are shown below. These projects are mutually exclusive, equally risky, and not repeatable. The CEO wants to use the IRR criterion, while the CFO favors the NPV method. You were hired to advise the firm on the best procedure. If the wrong Filename: 105.docx Filesize: 15.4K Downloads: 8 Print Length: 1 Pages/Slides Words: NA Account not required Answer this question Surround your text in *italics* or **bold**, to write a math equation use, for example, $x^2+2x+1=0\$ or $$\beta^2-1=0$$
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