Problemyou have the chance to participate in three projects

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Reference no: EM13381727

Problem

You have the chance to participate in three projects that produce the following cash flows (C1 is the cash flow in one year, C2 in two years, etc.):

Project	C1	C2	C3	C4	C5
A	500	500	500	500	500
B	1000	1000	1500	0	1000
C	1500	0	0	0	1000

a. Considering that the initial investments are: Project A: 1,000

Project B: 2,000

Project C: 1,000

If the cost of capital is 15%, compute the NPV for each project. Calculate the payback period of each project. Compute the IRR of each project. Which project do you pick, and why?

b. Considering that the initial investments are different for each project, as follows: Project A: 500

Project B: 2,500

Project C: 1,000

How does your analysis change? Which project do you pick?

Reference no: EM13381727

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