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Part c
6.25 Alternatives X and Y have rates of return of 10% and 18%, respectively. What is known about the rate of return on the increment between X and Y if the investment required in Y is (a) larger than that required for X, and (b) smaller than that re- quired for X? (c) Develop two spreadsheet ex- amples that illustrate your responses to parts (a) and (b).
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AnsweY The vaic retn on the nceet ha to be loygey he vote han 10%. e ince to be SmalleyBookd -M Home cut n Copy Insert Page Layout Formulas Data Review View Calbri General Clipboard Font Alignment Numb fe | c) Two samples follow with approximate ROR values of 10% for x and Ai c) Two Samples follow with approximate ROR values of 10% for X and 18% for Y (a) Investment for Y>x Investment for Y<X 4 Year CF for X CFforY CF for Y-X) 20,000-150,000 -30,000 23,000 37,500 14,500 23,000 37,50014,500 3,000 37,50014,500 23,000 7,50014,500 23,000 37,50014,500 23,000 37,500 14,500 23,000 37,50014,500 23,000 37,500 14,500 10.62% 18.62% 45.99% Year CF for X CF or Y CF for (YX) 60,000 1 29,000 22,500 6,500 6,500 0 150,000 -90,000 29,000 22,500 29,000 22,5006 4 29,000 22,500 6,500 5 29,000 22,500 6 29,000 22,500 6,500 729,000 22,500 6,500 -6,500 10 11 6 12 7 13 8 29,00022,500 6 141 ROR | RORİ 10.86% 18.62% -3.07%; 16 17 18 Sheetl Sheet2 Sheet3 Ready

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