Question
Pro vide an evaluation of the three proposed projects whose cash flow forecasts are found below: Product A Product B Product C Initial cost $750,000
Provide an evaluation of the three proposed projects whose cash flow forecasts are found below:
Product AProduct BProduct C
Initial cost$750,000$650,000$515,000
Expected life 5 years 5 years 4 years
Scrap value expected$-$35,000$40,000
Others expected cash inflows:
Year $$$
1180,000200,000300,000
2300,000240,000210,000
3230,000210,000 60,000
4330,000260,000220,000
5195,000155,000
The company cost of capital for each project is 13 percent. The company relies on several criteria when evaluating new investment opportunities. The projects are independent.
4 marks
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