You are the capital budgeting team for a movie production company. Your budget is $44 million. You are evaluating 7 advertising platforms to generate sales for a new movie. The total investment required to do all seven projects is $102 million. Therefore your team must decide which projects to fund and which not to fund this year.

Please run through npv, IRR, 3 year payback, PI ratio, CE NPV and CE PI while evaluating these projects. Notice the WACC for each project is specified in the project tables.

project

cost

mutually exclusive

PI ratio

PI rank

-

CE PI ratio

CE PI rank

-

overall budget

project 1

Instagram ads

WACC

12%

1

$(20)

x

1.03

0.93

$42

Mutually exclusive with project 2

2

$(19)

x

-

-

Year

date

cash flows

values

PV

CE PV

3

$(7)

-

-

0

10/2/17

PV investment cost

$(20)

$(20)

probability

CE PV

4

$(9)

-

-

1

10/2/18

FV cash inflow

9.5

$8

90%

$7.63

5

$(20)

-

-

2

10/2/19

FV cash inflow

8.5

$7

90%

$6.10

6

$(20)

-

-

3

10/1/20

FV cash inflow

7.5

$5

90%

$4.80

7

$(7)

-

-

npv

$0.6

irr

14%

3 year payback

$6

PI ratio

1.03

CE NPV

$(1.5)

CE PI ratio

0.93

project 2

Snapchat Ads

WACC

12%

Mutually exclusive with project 1

Year

date

cash flows

values

PV

0

10/2/17

PV investment cost

$(19)

probability

CE PV

1

10/2/18

FV cash inflow

8

88%

2

10/2/19

FV cash inflow

7

86%

3

10/1/20

FV cash inflow

6

84%

npv

irr

3 year payback

PI ratio

CE NPV

CE PI ratio

project 3

Newspaper ads

WACC

8%

Year

date

cash flows

values

PV

CE PV

0

10/2/17

PV investment cost

$(7)

probability

CE PV

1

10/2/18

FV cash inflow

4

95%

2

10/2/19

FV cash inflow

3

90%

3

10/1/20

FV cash inflow

2

85%

npv

irr

3 year payback

PI ratio

CE NPV

CE PI ratio

project 4

billboard ads

WACC

8%

Year

date

cash flows

values

PV

CE PV

0

10/2/17

PV investment cost

$(9)

probability

CE PV

1

10/2/18

FV cash inflow

5

90%

2

10/2/19

FV cash inflow

3

89%

3

10/1/20

FV cash inflow

2

85%

npv

irr

3 year payback

PI ratio

CE NPV

CE PI ratio

project 5

Radio ads

WACC

8%

Year

date

cash flows

values

PV

CE PV

0

10/2/17

PV investment cost

$(20)

probability

CE PV

1

10/2/18

FV cash inflow

9

91%

2

10/2/19

FV cash inflow

7

91%

3

10/1/20

FV cash inflow

6

91%

npv

irr

3 year payback

PI ratio

CE NPV

CE PI ratio

project 6

podcast ads

WACC

10%

Year

date

cash flows

values

PV

CE PV

0

10/2/17

PV investment cost

$(20)

probability

CE PV

1

10/2/18

FV cash inflow

9

93%

2

10/2/19

FV cash inflow

7

89%

3

10/1/20

FV cash inflow

5

87%

npv

irr

3 year payback

PI ratio

CE NPV

CE PI ratio

project 7

email ads

WACC

8%

Year

date

cash flows

values

PV

CE PV

0

10/2/17

PV investment cost

$(7)

probability

CE PV

1

10/2/18

FV cash inflow

4

95%

2

10/2/19

FV cash inflow

3

94%

3

10/1/20

FV cash inflow

2

93%

npv

irr

3 year payback

PI ratio

CE NPV

CE PI ratio