Question
homeowork please help The management of Scarborough Corporation has four projects to consider: Project Number 1234 Investment required: $480,000$360,000$270,000$450,000 PV of cash inflows @10% 567,270
homeowork please help
The management of Scarborough Corporation has four projects to consider:
Project Number
1234
Investment required: $480,000$360,000$270,000$450,000
PV of cash inflows @10%567,270433,400336,140522,970
Net Present Value$ 87,270$ 73,400$ 66,140$ 72,970
Life of the project6 years2 years6 years3 years
Internal rate of return16%14%18%19%
The company has a required rate of return of 10%, and has used this rate in deter-mining the above present values - as the company has a limited budget, and cannot undertake all of the projects at the present time, you have been hired to advise the company on how to proceed.
- Determine the project Profitability Index [PI] for each project
- Rank the projectson the following bases:
a)Net present values
b)Project profitability index
c)IRR
- Provide a brief discussion with the management of the company on how they may use the information you have provided
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