Question
Monson Company is considering three investment opportunities with cash flows as described below: Project A: Cash investment now $15,000 Cash inflow at the end of
Monson Company is considering three investment opportunities with cash flows as described below:
Project A: | Cash investment now | $15,000 |
| Cash inflow at the end of 5 years | $21,000 |
| Cash inflow at the end of 8 years | $30,000 |
Project B: | Cash investment now | $11,000 |
| Annual cash outflow for 5 years | $3,000 |
| Additional cash inflow at the end of 5 years | $25,000 |
Project C: | Cash investment now | $21,000 |
| Annual cash inflow for 4 years | $8,000 |
| Cash outflow at the end of 3 years | $10,000 |
| Additional cash inflow at the end of 4 years | $10,000 |
Required: Compute the net present value of each project assuming Monson Company uses a 12% discount rate.
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