Question
Bingo Plc has 1,000 to invest and is considering a number of different projects. The cash outflows and inflows for the projects are as follows:
Bingo Plc has £1,000 to invest and is considering a number of different projects. The cash outflows and inflows for the projects are as follows:
- Project A:investment of £500; Year 1 cash inflow of £300; Year 2 cash inflow of £400
- Project B:investment of £600; Year 1 cash inflow of £500; Year 2 cash inflow of £800
- Project C:investment of £700; Year 1 cash inflow of £400; Year 2 cash inflow of £900
Assuming a cost of capital of 10%, and that the projects are divisible.
What is the maximum possible NPV (rounded to the nearest £10) that Bingo Plc can generate from a £1,000 investment?
Step by Step Solution
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Step: 1
To calculate the Net Present Value NPV for each project and find the maximum possible ...
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
12th edition
978-0324597714, 324597711, 324597703, 978-8131518571, 8131518574, 978-0324597707
