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Compute net present value for each project

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Reference no: EM133035947

Problem - A company has four potential projects to invest in and requires an appropriate analysis of each project's value so as to make the best use of the limited investment budget of £800,000.

Project

Investment required

Annual Incremental Cash Inflow

Number of years

A

£256,850

£78,000

5

B

£365,550

£120,000

4

C

£229,525

£150,000

2

D

£355,000

£125,000

4

Required -

1. Compute Net Present Value (NPV) for each project.

2. Compute Profitability Index for each project.

3. Recommend which project(s) should be adopted to make best use of capital budget.

Reference no: EM133035947

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