question $1$:

email:

From: Bob Ryan, CEO

To: Scott Barber, CFO

Date: October $20,20$XX

Subject: New investment choices

Scott,

We have three investment choices to evaluate based on the board$$s final selection.

In the enclosed documents, please see the forecasted financial elements that will be part of your analysis.

Sincerely,

Bob

Bob Ryan

Chief Executive Officer

Azalea Properties present value tables: Periods

PV of $$1$ at $12\%$

PV of Ordinary

Annuity of $$1$ at $12\%$

$1$

$0\mathrm{.}89286$

$0\mathrm{.}89286$

$2$

$0\mathrm{.}79719$

$1\mathrm{.}69005$

$3$

$0\mathrm{.}71178$

$2\mathrm{.}40183$

$4$

$0\mathrm{.}63552$

$3\mathrm{.}03735$

$5$

$0\mathrm{.}56743$

$3\mathrm{.}60478$

board meeting minutes: Special Meeting $-$ Board of Directors

Minutes

Azalea Properties

A special meeting of the Board of Directors of Azalea Properties was held on October $19,20$XX$,$ at $9$ a$.$m$.$ EST, at the company offices.

Board Members Present:

Ken Mitchell $($Chairman$),$ Bob Ryan $($CEO$,$ President$),$ Cathy Wilson, Paul Slider, Mort Peterson, Shepard Cox, and Diane Johnson $($Secretary$)$

Special Guests:

Braddick, Nelson & Winchester PA$,$ Somerville, Michigan

James Nelson, CPA, CFP$,$ Partner

Scott Bolten, Principal

Nanci Mayfield, Manager

Proceedings:

Meeting was called to order by Ken Mitchell, Chairman of the Board, at $9$ a$.$m$.$ EST, at the company offices. Mr$.$ Mitchell introduced the special guests and turned over the floor.

Presentation:

Mr$.$ Nelson and team presented $7$ investment choices for the board$$s selection and approval. All investments had different cash flows and growth rates. All investments met the board$$s criteria of an initial investment contribution of $$3$ to $$5$ million and an investment duration of $5$ years.

After a short break, the board narrowed their selection to $3$ investments:

Coral Bells

Moon Glow

Sweet Aster

After discussion, $12\%$ was agreed upon as a required rate of return before taxes.

Adjournment:

There being no further business to come before the meeting, the meeting was adjourned at $11$:$30$ a$.$m$.$ EST.

Respectfully submitted:

Diane Johnson, Secretary investment: Investment

Forecasted Financial Elements

Coral Bells

Initial investment: $$5,000,000$

Annual cash flow: $$1,550,000$

Annual growth rate: No change

Moon Glow

Initial investment: $$4,000,000$

Annual cash flow: $$1,000,000$

Annual growth rate: $10\%$

Sweet Aster

Initial investment: $$3,400,000$

Annual cash flow: $$975,000$

Annual growth rate: $5\%$ According to this information Scroll down to complete all parts of this task.

The board of directors of Azalea Properties is evaluating $3$ different investments. When evaluating these investments, Azalea Properties must decide whether to rely on NPV or the profitability index as the primary criterion.

For each item, enter the appropriate amount in the associated cells. If the amount is zero, enter a zero $(0).$ Round NPV and interim calculation for NPV to the nearest whole number. Round profitability index to the nearest hundredth. Use NPV to calculate the profitability index. For questions $4.$ and $8.,$ select from the option list provided which investment Azalea Properties should choose. Each choice may be used once, more than once, or not at all. Question

Answer

$1.$ What is the NPV for Coral Bells?

$2.$ What is the NPV for Moon Glow?

$3.$ What is the NPV for Sweet Aster?

$4.$ Which investment should Azalea Properties choose based on the NPV method alone?

$5.$ What is the profitability index for Coral Bells?

$6.$ What is the profitability index for Moon Glow?

$7.$ What is the profitability index for Sweet Aster?

$8.$ Which investment should Azalea Properties choose based on profitability index alone?