Question
Project 1 Project 2 Project 3 Project 4 Initial CF -4,000,000 -5,000,000 -10,000,000 5,000,000 Year 1 CF 1,000,000 2,000,000 4,000,000 2,700,000 Year 2 CF 2,000,000
| Project 1 | Project 2 | Project 3 | Project 4 | |||
| Initial CF | -4,000,000 | -5,000,000 | -10,000,000 | 5,000,000 | ||
| Year 1 CF | 1,000,000 | 2,000,000 | 4,000,000 | 2,700,000 | ||
| Year 2 CF | 2,000,000 | 3,000,000 | 6,000,000 | 2,700,000 | ||
| Year 3 CF |
| 3,000,000 | 5,000,000 |
|
You have a $10 million capital budget and must make the decision about which investments your firm should accept for the coming year. The firms cost of capital is 12 percent. Use the information on the four projects to determine what project(s) your firm should accept on the basis of NPV?
Projects 3, 4
Projects 1, 2
Project 3
Projects 2, 4
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Complete Business Statistics
Authors: Amir Aczel, Jayavel Sounderpandian
7th Edition
9780071077903, 73373605, 71077901, 9780073373607, 77239695, 978-0077239695
