Question
Red Rider Company Red Rider Company is considering three investment opportunities having cash flows as described below: Project A Cash investment now $10,000 Cash inflow
Red Rider Company Red Rider Company is considering three investment opportunities having cash flows as described below: Project A Cash investment now $10,000 Cash inflow at the end of 4 years $15,000 Cash inflow at the end of 7 years $20,000 Project B Cash investment now $15,000 Annual cash outflow for 4 years $6,000 Additional cash inflow at the end of 4 years $15,000 Project C Cash investment now $15,000 Annual cash inflow for 4 years $15,000 Cash outflow at the end of 3 years $3,000 Additional cash inflow at the end of 4 years $15,000 Red Rider Company uses a 11% required rate of return to evaluate investments. Required: Calculate the net present value of each project.
based on net present vaue only, rank the projects in terms of acceptance.
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