Question
Hanover Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. They are considering investments in 3 different technologies to develop wireless
Hanover Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. They are considering investments in 3 different technologies to develop wireless communication devices. Consider the following cash flows of the 3 independent projects. The discount rate is 10% and Hanover has $30 million to invest in new projects this year. What is the NPV, IRR and profitability index for these projects? What would you recommend to the CEO? In other words, which project(s) provide the most value given a limited capital budget of $30 million?
WACC 10%
| year | Company A | company b | Company c | |
| 0 | -10 | -20 | -30 | |
| 1 | 25 | 20 | 20 | |
| 2 | 15 | 50 | 40 | |
| 3 | 5 | 40 | 100 |
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Auditing A Risk Based Approach to Conducting a Quality Audit
Authors: Karla Johnstone, Audrey Gramling, Larry E. Rittenberg
10th edition
978-1305080577
