Question
Your firm has the following investment opportunities curently available. Your firm's WACC is 11.30%. Which of these projects should you persue or reject and why?
Your firm has the following investment opportunities curently available.
Your firm's WACC is 11.30%.
Which of these projects should you persue or reject and why?
Project A
Cost - 18,000,000 22% IRR
Project B
Cost - 25,000,000 18% IRR
Project C
Cost - 17,000,000 14% IRR
Project D
Cost - 32,000,000 11% IRR
Project E
Cost - 15,000,000 8% IRR
Are any of these better than one additional project, that has a terminal year cash flow of $9,424,080, an initial investment of $22,300,000, NPV of $4,272,606.84, and IRR of 18.02%. Here's the balance sheet for the company if this helps answer the question.
Cash | 5,000,000 | Accounts payables & Accrual | 13,000,000 |
Accounts Receivable | 24,000,000 | Notes Payable | 43,000,000 |
Inventories | 39,000,000 | Long-term Debt | 52,000,000 |
Preferred Stock | 9,000,000 | ||
Net Fixed Assets | 125,000,000 | Common Equity | 76,000,000 |
Total Assets | 193,000,000 | Total Liabilities & Owners' Equity | 193,000,000 |
Thank you!
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