Question:

Compute for the ROI of Project On The Beach:

Compute for the payback reciprocal (rate of return) of Project On The Beach:

Compute for the profitability index of Project On The Beach:

Compute the NPV of Project On The Beach:

You are the head of the project selection team at Broken Arrow records. Your team is considering three different recording projects. Based on past history, Broken Arrow expects at least a rate of return of 20 percent. Your financial advisors predict inflation to remain at 2 percent into the foreseeable future. Given the following information for each project, which one should be Broken Arrow's first priority? Should Broken Arrow fund any of the other projects? If so, what should be the order of priority based on return on investment? Recording Project: Time Fades Away Year Investment $600,000 0 2 3 4 5 Revenue Stream 0 600,000 75,000 20,000 15,000 10,000 Recording Project: On the Beach Year Investment $400,000 0 1 2 3 4 5 Revenue Stream 0 400,000 100,000 25,000 20,000 10,000 Recording Project: Tonight's the Night Year Investment $200,000 0 1 2 3 4 5 Revenue Stream 0 200,000 125,000 75.000 20,000 10,000