Posted: July 7th, 2016
Suppose the following two proposals were being considered. Find the Present Value of the proposed project. Select the project you would choose. Explain what other considerations you think are important when choosing one project over another.
Suppose the first project expects to receive $25,000 in 110 days, and the opportunity cost of capital, i, annually is 6%, or 0.06.
From the second project, the company expects to receive $45,000 in 150 days and the opportunity cost of capital, i, annually is 5%, or 0.05.
Present calculations, explanation, and any additional considerations in 200 words.
In 20X4, Olentangy Health Care (OHC)’s cost of capital was 6%. Its investments on a historical cost valuation basis are $80,000, on a replacement cost basis are $100,000, and on a current market value basis are $110,000. If you were on OHC’s board, what minimum level of annual cash flow would you require in order to continue operations and proceed with planned significant new investments?
A. $4,800
B. $6,000
C. $6,600
D. $8,000
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