5.

A Company is comparing three alternative investments in Field 1, Field 2 and Field 3. This company opts to undertake the analysis using a discount rate of 10%. The estimated cash flows for each investment are as follow:

Years	Field 1 Cash Flow $	Field 2 Cash Flow $	Field 3 Cash Flow $
0	-75,000	-175,000	-475,000
1	30,000	25,000	150,000
2	20,000	25,000	150,000
3	20,000	25,000	150,000
4	15,000	25,000	75,000
5	10,000	25,000	75,000
6	5,000	25,000	50,000
7	0	25,000	20,000
8	0	25,000	20,000
9	0	25,000	20,000
10	0	25,000	20,000

Using the standard discount factor method (end-of-year cash flow) and interest rate of 10%. Calculate:

1. NPVs of the future cash flow for each project.

2. Profit to investment ratio (PI) for each project (assuming all investments is on Year 0 and production is started from Year 1).

c. Calculate IRR for each project and evaluate the attractiveness of each project and decide which project should be chosen by the company.

I think excel can be used. Thanks