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The Xia Corporation is a company whose sole assets are $100,000 in cash and three projects that it will undertake. The projects are risk-free and
The Xia Corporation is a company whose sole assets are $100,000 in cash and three projects that it will undertake. The projects are risk-free and have the following cash flows: (Click on the following icone in order to copy its contents into a spreadsheet.) Project Cash Flow Today - $20,000 - $10,000 - $60,000 Cash Flow in One Year $30,000 $25,000 $80.000 Xia plans to invest any unused cash today at the risk-free interest rate of 10.0%. In one year, all cash will be paid to investors and the company will be shut down. a. What is the NPV of each project? Which projects should Xia undertake and how much cash should it retain? b. What is the total value of Xia's assets (projects and cash) today? c. What cash flows will the investors in Xia receive? Based on these cash flows, what is the value of Xia today? d. Suppose Xia pays any unused cash to investors today, rather than investing it. What are the cash flows to investors in this case? Based on these cash flows, what is the value of Xia today? e. Fxplain the relationshin in vour answers to parts (b) (c) and (d) a. What is the NPV of each project? The NPV of Project A is $ (Round to the nearest cent.) The NPV of Project B is $ (Round to the nearest cent.) The NPV of Project C is $ (Round to the nearest cent.) Which projects should Xia undertake and how much cash should it retain? (Select all the correct choices.) O A. Projects B and C have positive NPV, and Xia has enough cash, so Xia should take them OB. All projects have positive NPV, and Xia has enough cash, so Xia should take all of them. OC. Projects A and C have positive NPV, and Xia has enough cash, so Xia should take them. OD. Projects A and B have positive NPV, and Xia has enough cash, so Xia should take them. b. What is the total value of Xia's assets (projects and cash) today? The total value of Xia's assets (projects and cash) today is $ (Round to the nearest cent.) c. What cash flows will the investors in Xia receive
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