U2 - 6
?(Round to two decimal? places.)
NPV is calculated by discounting the cashflows
PV = C/(1+r)^n
C - Cashflow
r - Discount rate
n - years to the cashflow
Project A:
NPV = -14 + 23/(1+0.09)^1 = 7.10 million
Project B:
NPV = 4 + 4/(1+0.09)^1 = 7.67 million
Project C:
NPV = 22 - 7 /(1+0.09)^1 = 15.58 million
b.
Choose project C, since it has the highest NPV.
c.
Choose projects C and B, since they have higher NPV compared to project A.
U2 - 6 ?(Round to two decimal? places.) Your firm has identified three potential investment projects....
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