Economics NPV,IRR,ROI Question
Help would be appreciated, thanks. Please show work
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1. (20 Points) Your company is considering investing in three projects with projected Operating Income and Investment streams as shown in the following table. (10 points) Rank the three projects by NPV, ROI, IRR, and DROI assuming your investment opportunity rate is 20% and using mid-period discounting.
a. (5 points) If your company only has $6 million to invest in one of these projects (and plenty of small projects that will return 20% on average) which project do you recommend?
b. (5 points) If your company finds some more money and now has $11 million to invest (and plenty of small projects that will return 20% on average) which project(s) do you recommend?
|
Year |
Project A |
Project B |
Project C |
|||
|
Oper Inc M$ |
Invest M$ |
Oper Inc M$ |
Invest M$ |
Oper Inc M$ |
Invest M$ |
|
|
0 |
1000 |
1000 |
1000 |
|||
|
1 |
0 |
1000 |
0 |
1000 |
0 |
1000 |
|
2 |
2000 |
3000 |
2000 |
2000 |
2000 |
3000 |
|
3 |
8000 |
0 |
4000 |
1000 |
3500 |
0 |
|
4 |
4000 |
0 |
3600 |
1000 |
3150 |
0 |
|
5 |
2000 |
0 |
3240 |
0 |
2835 |
0 |
|
6 |
1000 |
0 |
2916 |
0 |
2552 |
0 |
|
7 |
500 |
0 |
2624 |
0 |
2297 |
0 |
|
8 |
2362 |
0 |
2067 |
0 |
||
|
9 |
1860 |
0 |
||||
|
10 |
1674 |
0 |
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