Question
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless
| Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects available to the company. Assume the discount rate for all projects is 10 percent. Further, the company has only $31 million to invest in new projects this year. |
| Cash Flows (in $ millions) |
| Year | CDMA | G4 | Wi-Fi | ||||||
| 0 | $ | 9 | $ | 22 | $ | 31 | |||
| 1 | 13 | 20 | 29 | ||||||
| 2 | 9.5 | 35 | 43 | ||||||
| 3 | 6.5 | 31 | 31 | ||||||
| a. | Calculate the profitability index for each investment. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) |
| b. | Calculate the NPV for each investment |
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Cost Benefit Analysis
Authors: Harry F. Campbell, Richard P.C. Brown
3rd Edition
1032320753, 9781032320755
