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The management of Revco Products is exploring ve different investment opportunities. Information on the ve projects under study follows: Investment required ${2 70,000) ${4 50,000)
The management of Revco Products is exploring ve different investment opportunities. Information on the ve projects under study follows: Investment required ${2 70,000) ${4 50,000) ${400,00 O) ${360, 00 0) ${480,000) Present value of cash inows at a 10% discount rate 336,140 522,970 379,760 433,400 567,270 Net present value =$ 66,140 :33 72,970 $ {20,240} =$ 73,400 =$ 87,270 Life of the project ' 6 years 3 years 5 years 1 2 years 6 years The company's required rate of return is [0%: thus, a 10% discount rate has been used in the preceding present value computations. Limited funds are available for investment. and so the company cannot accept all oftlte available projects
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