J
josephine y
Guest
The manager must decide which new product lines to introduce in the following year. After tax, cash flows & the initial investments are shown below. All projects are independent. The manager's financial adviser estimates that interest rates will be in the range 5.5% to 9.5% p.a & the company targets projects with higher returns.
Project A
Investment - 12000, Year 1 - 6000, Year 2 - 4000,
Year 3 - 4000, Year 4 - 4500, Year 5 - 5000
Project B
Investment - 7500, Year 1 - 3000, Year 2 - 3000,
Year 3 - 2500, Year 4 - 2500, Year 5 - 1000
Project C
Investment - 10000, Year 1 - 4000, Year 2 - 5000,
Year 3 - 5000, Year 4 - 2500, Year 5 - 1500
Calculate the respective Net Present Values. Which project should be chosen?
Thanks.
Project A
Investment - 12000, Year 1 - 6000, Year 2 - 4000,
Year 3 - 4000, Year 4 - 4500, Year 5 - 5000
Project B
Investment - 7500, Year 1 - 3000, Year 2 - 3000,
Year 3 - 2500, Year 4 - 2500, Year 5 - 1000
Project C
Investment - 10000, Year 1 - 4000, Year 2 - 5000,
Year 3 - 5000, Year 4 - 2500, Year 5 - 1500
Calculate the respective Net Present Values. Which project should be chosen?
Thanks.