The AlhpaBeta company is considering considering several investment opportunities.The interest rate for both borrowing and lending is 15 per cent per period and the investment/dividend opportunities are given in the following table:
(a)What is the net present value of each project?
(b)Based on the NPV rule which project(s)should the company invest in?
(c)What is the IRR of project AOne?
(d)The company has 2 equal shareholders,Alpha and Beta,and invests in the project CThree.Alpha would prefer to consume $500 today.What can she do? How much will she be able to consume later?
Definitions:
Income Share
The portion or percentage of national income or personal revenue received by an individual or group, often studied in the context of economic inequality.
Social Stratification
Refers to the way in which society is organized into layers based on wealth, power, and status.
Hierarchical Structure
An organizational system arranged in levels of importance or authority.
Wealthy Country
A nation characterized by a high level of economic development, significant gross domestic product (GDP) per capita, and an overall high standard of living.
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