Question
Question # 3 Hawaiian Industries has four potential projects all with an initial cost of $2,000,000. The capital budget for the year will only allow
Question # 3
Hawaiian Industries has four potential projects all with an initial cost of $2,000,000. The capital budget for the year will only allow Hawaiian industries to accept one of the four projects. Given the discount rates and the future cash flows of each project, which project should they accept?
Cash Flows | Project M | Project N | Project O | Project P |
Year one | $500,000 | $600,000 | $1,000,000 | $300,000 |
Year two | $500,000 | $600,000 | $800,000 | $500,000 |
Year three | $500,000 | $600,000 | $600,000 | $700,000 |
Year four | $500,000 | $600,000 | $400,000 | $900,000 |
Year five | $500,000 | $600,000 | $200,000 | $1,100,000 |
Discount Rate | 6% | 9% | 15% | 22% |
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