Under Project A, Joe would receive 0.15 * $75,000 = $11,250 per year. Under Project B, Joe would receive 0.15 * $63,000 = $9,450. Under Project C, Joe would receive 0.15 * $68,000 = $10,200. Thus, since $11,250 > $10,200 > $9,450, Joe would choose Project A to maximize his income. However, Frank would prefer that Project B be chosen as it results in the greatest increase in firm value for CCC ($153,000 > $145,000 > $138,000). Notice Copyright Copyright © 2010 by John Wiley & Sons Canada, Ltd. or related companies. All rights reserved. The data contained in this file is protected by copyright. This manual is furnished under licence and may be used only in accordance with the terms of such licence. The material provided herein may not be downloaded, reproduced, stored in a retrieval system, modified, made available on a network, used to create derivative works, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise without the prior written permission of John Wiley & Sons Canada, Ltd.
Under Project A, Joe would receive 0.15 * $75,000 = $11,250 per year. Under Project B, Joe would receive 0.15 * $63,000 = $9,450. Under Project C, Joe would receive 0.15 * $68,000 = $10,200. Thus, since $11,250 > $10,200 > $9,450, Joe would choose Project A to maximize his income. However, Frank would prefer that Project B be chosen as it results in the greatest increase in firm value for CCC ($153,000 > $145,000 > $138,000). Notice Copyright Copyright © 2010 by John Wiley & Sons Canada, Ltd. or related companies. All rights reserved. The data contained in this file is protected by copyright. This manual is furnished under licence and may be used only in accordance with the terms of such licence. The material provided herein may not be downloaded, reproduced, stored in a retrieval system, modified, made available on a network, used to create derivative works, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise without the prior written permission of John Wiley & Sons Canada, Ltd.
Test-Bank-Introduction-to-Corporate-Finance-2nd-Edition-Booth.docx