Given the current economic conditions in canada discuss any

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A company is considering three separate, mutually exclusive projects A, B, and C. Project A requires a $10,000 cash outlay (outflow) today and is expected to generate after-tax cash flows of $7,000 in year 1 and $6,000 in year 2. Project B requires an $8,500 cash outlay today and is expected to generate after-tax cash flows of $4,000 in year 1 and $7,000 in year 2. Project C requires a $10,600 cash outlay today and is expected to generate after-tax cash flows of $5,000 for each of the next 3 years. Assume that 15% is the appropriate discount rate to perform this exercise.

Deliverables:

a.   Calculate the NPV for all 3 projects.
b.   If a capital budget constraint of $20,000 is placed on new investments, determine which project(s) should be selected and why?
c.   What is the loss to the company from the capital rationing constraint you have applied tin "b"
d.  Given the current economic conditions in Canada, discuss any options that the organization can execute to perform all projects that have positive NPV.

Reference no: EM13581033

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