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Sunshine Corp considers several investment opportunities for next year to expand its business: - Project A: initial investment requires an outlay of $200,000 and the
Sunshine Corp considers several investment opportunities for next year to expand its business: - Project A: initial investment requires an outlay of $200,000 and the PI is 1.5. - Project B: initial investment requires an outlay of $100,000 and the IRR is 12%. - Project C : initial investment requires and outlay of 50,000 and the payback period is 3.5 years. All the above projects are traditional projects (i.e., initial cash outflows followed by cash inflows) and have a life of 5 years. The cash inflows of each project are identical throughout its life (i.e., for a particular project, CFt is a constant, where t=1,2,3,4, 5). The company follows a strict residual dividend policy and prefers to source its new equity funds from retained earnings (i.e., issuing new shares is not an option). The company anticipates net income of $100,000 next year. The company's target debtto-equity ratio is 0.25, which means every $1 of equity financing is matched with $0.25 borrowed funds. The cost of capital of the company is 10%. What is the NPV of project A? Enter your answer as the closest integer number without the dollar sign. For example, if your answer is 123,456.78, enter the answer as 123457. What is the NPV of project B? Enter your answer as the closest integer number without the dollar sign. For example, if your answer is 123,456.78, enter the answer as 123457. What is the NPV of project C? Enter your answer as the closest integer number without the dollar sign. For example, if your answer is 123,456.78, enter the answer as 123457. A Which project(s) should the company accept for investment? Enter your answer in alphabetical order without any symbol (e.g., space, comma, etc.). For example, if you answer is A,B, and C, enter the answer as ABC. A
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