Mei's Safe House (MSH) is a women's shelter for immigrant women and children seeking refuge from abusive relationships. It is currently considering a number of long-term fundraising projects. Each project requires an initial investment. They have over $1,500,000 in contributions that they can use to invest in fundraising projects. They want to spend their money wisely. 

In choosing projects, MSH has certain minimum criteria that must be met:

·        For projects that require initial investments under $100,000, a minimum payback of 4 years is required.

·        For projects that require initial investments $100,000 or over, a minimum payback of 5 years is required.

·        A minimum return of 7% is required on all projects.

Information about the projects is summarized below:

  Initial Investment Year Expected Profit (Loss) Expected Net Cash Flow          

Project A        

year 1) $140,000 $52,000 $80,000    

2) 32,000 60,000    

3) 12,000 40,000    

4) 7,000 35,000  

  5) 2,000 30,000    

6) 1,000 25,000          

Project B         $90,000 year 1) $12,000 $30,000    

2) 12,000 30,000    

3 12,000 30,000    

4 11,000 29,000  

  5 11,000 29,000    

6 10,000 28,000          

Project          C $80,000 1) $9,000 $25,000    

2) 9,000 25,000

  3) (-1,000) 15,000    

4 (-1,000) 15,000    

5 (-1,000) 15,000    

6 (-1,000) 15,000

         

Project D         $600,000 1 $130,000 $250,000    

2 30,000 150,000    

3 (-20,000) 100,000    

4 (-20,000) 100,000  

  5 (-15,000) 105,000    

6 (-10,000) 105,000          

Project E         $800,000 1 $240,000 $400,000    

2 40,000 200,000    

3 40,000 200,000    

4 40,000 200,000    

5 (-10,000) 150,000    

6 (-10,000) 140,000          

Project F         $250,000 1 $10,000 $75,000    

2 10,000 75,000  

  3 10,000 75,000    

4 10,000 75,000    

5 10,000 75,000    

6 10,000 75,000

Required:

a)   Calculate the payback periods and NPV for each project. Remember to show all your calculations.

b)   Identify the projects that fit MSH's criteria for acceptance and rank them from most to least attractive.

c)   Identify other things that should be considered, besides your calculations, before determining which project(s) to undertake.