Question
Your firm has identified three potential investment projects. The projects and their cash flows are shown here:(Click on the icon located on the top-right corner
Your firm has identified three potential investment projects. The projects and their cash flows are shown here:(Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.)
Project | Cash Flow Today (millions) | Cash Flow in One Year (millions) |
| ||
A | negative $ 10$10 | $ 20$20 | |||
B | $ 5$5 | $ 5$5 | |||
C | $ 20$20 | negative $ 10$10 |
Suppose all cash flows are certain and the risk-free interest rate is
10 %10%.
a. What is the NPV of each project?
b. If the firm can choose only one of these projects, which should it choose?
c. If the firm can choose any two of these projects, which should it choose?
a. What is the NPV of each project?
The NPV of project A is ____
million. (Round to two decimal places.)
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