Question
Halla Enterprises is considering the following three investments: Let's say the appropriate discount rate for the investment is 15%. Year Cash Flow 0 -6,000 -10,000
Halla Enterprises is considering the following three investments: Let's say the appropriate discount rate for the investment is 15%.
| Year | Cash Flow | |||||
| 0 | -6,000 | -10,000 | -4,000 | |||
| 1 | 3,000 | 2,000 | 1,000 | |||
| 2 | 3,000 | 4,000 | 4,000 | |||
| 3 | 3,000 | 8,000 | 6,000 | |||
| 4 | 3,000 | 6,000 | 0 | |||
| 5 | 3,000 | 1,000 | 0 | |||
1. Calculate the net present value of each investment.
2. What is the internal return on each investment?
3. Which investment plan do you think is the most economical? Explain its validity.
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Investment Analysis and Portfolio Management
Authors: Frank K. Reilly, Keith C. Brown
10th Edition
978-0538482387
