Tropical plantation should grow crop

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Reference no: EM133326259

Case: Tropical Plantation just acquired an empty land in Oahu, Hawaii, which is good to grow either crop A or crop B, but not both at the same time. Given below are the cash flows associated with growing crop A and crop B. The negative cash flow in year 0 indicate initial investments. The appropriate discount rate is 15% for growing both crops.

Year	0	1	2	3	4
Crop A	-100	40	50	62	0
Crop B	-73	30	30	30	30

Question 1. The NPV of growing crop A is .

Question 2. The NPV of growing crop B is .

Question 3. Based on the NPV rule, Tropical Plantation should grow crop . (Answer A or B.)

Question 4. The ROI of growing crop A is .

Question 5. The ROI of growing crop B is .

Question 6. Based on the ROI rule, Tropical Plantation should grow crop . (Answer A or B.)

Reference no: EM133326259

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