Question
Q2. Berry Inc. assessing 3 investment alternatives. Listed below are the required cash outflows and expected cash inflows for each alternative (ignore taxes): Project A
Q2. Berry Inc. assessing 3 investment alternatives. Listed below are the required cash outflows and expected cash inflows for each alternative (ignore taxes):
| Project A | Project B | Project C | |
| Investment | 110,000 | 135,000 | 100,000 |
| Year 1 | $55,000 | $30,000 | $0 |
| Year 2 | $40,000 | $30,000 | $0 |
| Year 3 | $20,000 | $30,000 | $45,000 |
| Year 4 | $5,000 | $30,000 | $55,000 |
| Year 5 | $2,000 | $30,000 | $65,000 |
The company has a required rate of return of 9%.
Required:
Evaluate and rank each alternative using net present value (NPV). What challenges do you face in making the decision? Will you like to calculate any supplementary measures?
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Challenges In Advanced Management Accounting
Authors: The Open University
1st.0th Edition
B01D8X506Y
