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Which of the following two projects (A or B) would you select (assume only one can be undertaken). HINT: Assume that the cashflows are earned
| Which of the following two projects (A or B) would you select (assume only one can be undertaken). | ||||||||||||||||
| HINT: Assume that the cashflows are earned at the end of the year. | ||||||||||||||||
| Show your reasoning: | ||||||||||||||||
| A | ||||||||||||||||
| Capex required Year 0 | 13 000 000 | |||||||||||||||
| Annual Cash Flow | 2 900 000 | |||||||||||||||
| No of years of Cash Flow | 12 | |||||||||||||||
| Wacc | 18% | |||||||||||||||
| B | ||||||||||||||||
| Capex required Year 0 | 26 000 000 | |||||||||||||||
| Annual Cash Flow | 5 200 000 | |||||||||||||||
| No of years of Cash Flow | 15 | |||||||||||||||
| Wacc | 18% | |||||||||||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11 | Year 12 | ||||
| NPV | ||||||||||||||||
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Year 6 | Year 7 | Year 8 | Year 9 | Year 10 | Year 11 | Year 12 | Year 13 | Year 14 | Year 15 | |
| NPV | ||||||||||||||||
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Grow The Pie How Great Companies Deliver Both Purpose And Profit
Authors: Alex Edmans
1st Edition
1108494854,1108849482
