Year0$10,000.001$ 3,000.00Project ACash FlowProject BCash Flow$11,000.00$5,000.002$ 4,000.00$ 4,000.003$ 5,000.00$ 4,000.004$3,000.00$ 3,000.00Assuming that the relevant cost of capital for both projects is 10%, you should be able todetermine the net present value (NPV) and the internal rate of return (IRR) for both project.Assume now that the firm has capital rationing, but knows that its true reinvestment rate is21%, while its cost of capital is 10 percent. Given this information, determine the modifiednet present value (MNPV) for Project A.$3,811.27O $3,622.02O $4,280.07O $4,162.90O $4,404.83

Step 1: The calculation of NPV, IRR, and MNPV ABCD1YearProject AProject BFV Project A @ 21%20…

Answered: Year 0 $10,000.00 1 $ 3,000.00 Project…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter10: Capital Budgeting: Decision Criteria And Real Option

Section: Chapter Questions

Problem 21P

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