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Your boss asks you to review a recent analysis that was done to compare three alternative proposals to enhance the firm's manufacturing facility. You find
Your boss asks you to review a recent analysis that was done to compare three alternative proposals to enhance the firm's manufacturing facility. You find that the prior analysis ranked the proposals according to their IRR, and recommended the highest IRR option, Proposal A. You decide to redo the analysis using NPV to determine whether this recommendation was appropriate. But while you are confident the IRRs were computed correctly, it seems that some of the underlying data regarding the was required in Year 0. And for Proposal C, you cannot find the estimated cashflow in Year 3. Here is the information you have (in \$ millions): Suppose the appropriate cost of capital for each alternative is 10%. Using this information, determine the NPV of each proposal. Which project should the firm choose? \begin{tabular}{ccrrrr} Proposal & IRR & Year 0 & Year 1 & Year 2 & Year 3 \\ \hline A & 60.0% & $100 & $30 & $153 & $88 \\ B & 53.3% & $ & $0 & $206 & $95 \\ C & 52.1% & $100 & $37 & $0 & $ \\ \hline \end{tabular} Suppose the appropriate cost of capital for each alternative is 10%. Using this information, determine the NPV of each proposal. The NPV for proposal A is $ million. (Round to two decimal places.) The NPV for proposal B is $ million. (Round to two decimal places.) The NPV for proposal C is $ million. (Round to two decimal places.) Which project should the firm choose
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