Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. apple ltd is considering investing in one of two m

Apple Ltd is considering investing in one of two mutually exclusive projects T and V...

90.2K

Verified Solution

Question

Finance

image

Apple Ltd is considering investing in one of two mutually exclusive projects T and V which are described below. Apple's weighted average cost of capital (WACC) is 12%, the market return is 12% and the risk-free rate is 4%. Apple estimates that the beta for project Tis 1.5 and the beta for project Vis 1.1. Project I Project V Net after-tax cash inflows ($) Year O Initial investment -400,000 -480,000 Year 1 200,000 150,000 Year 2 200,000 200,000 Year 3 200,000 250,000 Year 4 200,000 300,000 The better investment for Apple Ltd is Select one: a. Project V, because it has a higher NPV using the WACC. b. Project V, because it has a higher risk-adjusted NPV. c. Both should be accepted because they both have a positive NPV. d. Project T, because it has a higher NPV using the WACC. e. Project T, because it has a higher risk-adjusted NPV

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students