Cash flow

Project A

$25 million

$10 million per year for four years

Project B

$15 million

$5 million per year for five years

Project C

$10 million

$5 million per year for four years

Project D

$15 million

$7.5 million per year for three years

An investor has a budget of

$25 million. He can invest in the projects shown above. If the cost of capital is

8%, what investment or investments should he make?

A.

Project A

B.

Project B

C.

Project B and Project C

D.

Project C and Project D