What is the present value of the annual cash flows

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Reference no: EM132019965

Question: Norwood, Inc., which has a hurdle rate of 14%, is considering three different independent investment opportunities. Each project has a seven-year life. The annual cash flows and initial investment for each of the projects are as follows: (Future Value of $1, Present Value of $1, Future Value Annuity of $1, Present Value Annuity of $1.) (Use appropriate factor from the PV tables.)

	Project A	Project B	Project C
Annual cash flows	131,670	120,720	109,760
Initial investment	322,000	302,000	232,000

a. What is the present value of the annual cash flows for each of the three projects? (Round your answers to the nearest dollar amount.)

b. What is the net present value of each of the projects? (Round your intermediate calculations and final answers to the nearest dollar amount.)

c. What is the profitability index of each of the projects? (Round the intermediate calculation to the nearest dollar amount. Round your answers to 2 decimal places.)

d. In what order should Norwood prioritize investment in the projects?

B, A, C

C, A, B

A, B, C

Reference no: EM132019965

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