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Which investments should the firm adopt

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Question: A textile company has $ 20,00,000.00 available for investment.It has evaluated its options and has found that only four investments (W,X,Y & Z) have positive ner present values.All these investments are entirely independent of one other.However,they have an equal life period of 5 years.The risk free interest rate is 5% per anum.The cost of capital to the company is 10%.The relevant data for the selected investments are :

INVESTMENT        INITIAL OUTLAY          PRESENT VALUE OF FUTURE CASH FLOWS

W                           800000.00                              1000000.00

X                            600000.00                              1000000.00

Y                            700000.00                              1140000.00

Z                            600000.00                              1200000.00

Which investments should the firm adopt? Would your be different if the present value of future cash flows of project W were $ 1250000.00 instead of $ 1000000.00

Reference no: EM131688289

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