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A firm has three investment opportunities. Each costs $1,000, and the firm's cost of capital is 10 percent. The cash inflow of each investment is
A firm has three investment opportunities. Each costs $1,000, and the firm's cost of capital is 10 percent. The cash inflow of each investment is as follows:(7 pts total)
cash inflowABC
year
1$300500100
2300400200
3300200400
4300100500
- If the net present value method is used, which investment(s) should the firm make?(2 pts)
- What is the internal rate of return of investment A, B and C? Which investment(s) should the firm make?(3 pt.)
- What is the payback period for each investment?(2 pt.)
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