Question
A company is planning for their budget in year 2021. There are four three-year projects suggested by the department. Project A requires an initial investment
A company is planning for their budget in year 2021. There are four three-year projects suggested by the department. Project A requires an initial investment of $11,000 and the cash flow for the following three years are $1,100, $1,100, $13,200 respectively. Project B requires an initial investment of $3,300 and the cash flow for the following three years are $3,300, $330, $330 respectively. Project C requires an initial investment of $7,700 and the cash flow for the following three years are $7,700, $770, $770 respectively. Project D requires an initial investment of $2,200 and the cash flow for the following three years are $1,100, $550, $550 respectively. The CEO asked you to pick up the projects within a budget constraint of $13,200 and asked you to choose the project. What is your choice.
(can be if the company's cost of capital is either 14.36%, 13.63%, 12.29%, 10.08%, choose project...)
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