SUNY OLD WESTBURY School of Business Final exam. BU4762 Financial Management. 1. Suppose that a company considers two alternative expansion projects. The first project requires initial outlay of – $100,000; and the second project costs less: CFo= – $7,000. Subsequent incremental cash flows from the more expensive project will be $60,000 for 5 years. The cash flows from the second alternative will be lower: D4500 for 3 years. Which expansion project would you recommend the company undertakes and why? Assume that a company decides to start a new operation abroad. The work can start immediately at a cost of -$: million. The new drilling site will bring cash flows as follows: CF=- $200,000; CF2 = $40,000; CF3 = $2 million, CF4 = $4 million, CFs = $3 million, CF6 = -$1 million. he last cash flow at time 6 is a nega %3D %3D onmental clean-up cost. Suppose that the WACC is 4%.

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