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