Posted by **LL** on Monday, October 19, 2009 at 1:06am.

Carlyle Inc. is considering two mutually exclusive projects. Both require an initial investment of

$15,000 at t = 0. Project S has an expected life of 2 years with after-tax cash inflows of $7,000

and $12,000 at the end of Years 1 and 2, respectively. Project L has an expected life of 4 years

with after-tax cash inflows of $5,200 at the end of each of the next 4 years. Each project has a

WACC of 9.00%, and neither can be repeated. The controller prefers Project S, but the CFO

prefers Project L. How much value will the firm gain or lose if Project L is selected over Project S,

i.e., what is the value of NPVL - NPVS?

a. $262.74

b. $291.93

c. $324.37

d. $356.80

e. $392.48

- finance -
**hd**, Saturday, October 12, 2013 at 1:02pm
c

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