d-47 yes gerial -inan Homework: Homework CH03 Score: 0 of 5 pts Instructor-creat
ID: 2784560 • Letter: D
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d-47 yes gerial -inan Homework: Homework CH03 Score: 0 of 5 pts Instructor-created question Your firm has identified three potential inwestment projects. The 1 of 8 (0 complete) Hw Score: 0%, 0 of 39 pts Help here: (Click on the icon on the data table below in order to copy its contents into a spreadsheet) Cash Flow Today (millions) -$11 Cash Flow in One Year S16 $15 Project $16 a. What is the NPV of each project? USE CB TECHNIQUES WORKSHEET b. If the firm can choose only one of these projects, which should it choose? c. If the firm can choose any two of these projects, which should it choose? a. What is the NPV of each project? The NPV of project Ais$ million. (Round to two decimal places) The NPV of project B is s million (Round to two decimal places ) The NPV of project C is million. (Round to two decimal places.) Click to select your answer(s) and then click Check Answer AIlExplanation / Answer
a.
NPV of project A = [$16 / (1 + 9%)] - $11
= $14.68 - $11
= $3.68 million.
NPV of project A is $3.68 million.
NPV of project B = [$3 / (1 + 9%)] - $2
= $2.75 - $2
= $0.75 million.
NPV of project B is $0.75 million.
NPV of project C = [-$15 / (1 + 9%)] + $16
= -$14.68 - $16
= $1.38 million.
NPV of project C is $1.38 million.
b.
NPV of project A is highest among all three projects, so project A should be accepted.
c.
If company can choose two project, then it can choose project A and project C, because both project has highest NPV.
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