A company has $20 million available to invest in new projects. There are three independent projects that

Question:

A company has $20 million available to invest in new projects. There are three independent projects that it is considering. The after-tax cash flows of the projects are as follows: Project Investment Required Year 1 cash flow Year 2 cash flow A -20 million 20 million 10 million B -10 million 8 million 7 million C -10 million 6 million 10 million Calculate the IRR, PI and NPV of each of the two-year projects and recommend which project(s) the company should invest in (and why). The company's cost of capital is 15%.

Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...