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Another friend of yours heard of the large amount of money you just inherited and asks you to join him in all or some of
Another friend of yours heard of the large amount of money you just inherited and asks you to join him in all or some of six different projects. The capital required for each project over the next five years is shown in the table below, along with the amount of budgeted capital. The problem is to determine which proposal to choose (if any)? \begin{tabular}{|c|c|c|c|c|c|c|c|} \hline & & \multicolumn{6}{|c|}{ Capital (in $000 s) required in } \\ \cline { 4 - 8 } Proposals & Expected NPV ($0000) & Year 1 & Year 2 & Year 3 & Year 4 & Year 5 & Year 6 \\ \hline 1 & 100 & 20 & 10 & 40 & 20 & 20 & 30 \\ 2 & 90 & 25 & 20 & 20 & 15 & 15 & 20 \\ 3 & 80 & 10 & 20 & 27 & 20 & 10 & 15 \\ 4 & 70 & 30 & 20 & 10 & 10 & 10 & 25 \\ 5 & 40 & 10 & 5 & 20 & 10 & 0 & 10 \\ 6 & 20 & 5 & 0 & 10 & 15 & 10 & 13 \\ \hline \multicolumn{2}{|c|}{ Capital available in each year } & 30 & 40 & 70 & 45 & 50 & 35 \\ \hline \end{tabular} What is the NPV of the investments? a. $120,000.00 b. $120.00 c. $110,000.00 d. $100,000.00
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