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2) A company is seeking to invest approximately $100 millions in new projects. After research three projects are considered candidates for construction. The non-discounted information
2) A company is seeking to invest approximately $100 millions in new projects. After research three projects are considered candidates for construction. The non-discounted information for the project is given in the table shown below, Land (millions) Working Capital Salvage FCI After tax (millions) cash flow years 1-10 vol 5 Project A $5 $20 $70 $18 Project B $10 10 $110 $20 Project C $10 $15 $80 $17 Assume FCI at time zero and yearly non-discounted cash flow for the assumed 10 years plant operation. This is a discounted cash flow. Calculate the important points for the three cash flows. Calculate: NPV (cumulative cash), DPBP (payback period), and ROROI (interest rate) for each project. Determine which should be preferred. The discounted profit after 10 years is calculated using the following equation: Ten years profit = 8.88 * Nominal profit. 2) A company is seeking to invest approximately $100 millions in new projects. After research three projects are considered candidates for construction. The non-discounted information for the project is given in the table shown below, Land (millions) Working Capital Salvage FCI After tax (millions) cash flow years 1-10 vol 5 Project A $5 $20 $70 $18 Project B $10 10 $110 $20 Project C $10 $15 $80 $17 Assume FCI at time zero and yearly non-discounted cash flow for the assumed 10 years plant operation. This is a discounted cash flow. Calculate the important points for the three cash flows. Calculate: NPV (cumulative cash), DPBP (payback period), and ROROI (interest rate) for each project. Determine which should be preferred. The discounted profit after 10 years is calculated using the following equation: Ten years profit = 8.88 * Nominal profit
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