A: What is the NPV of each investment? Which investment (if either) should be the company undertake?
Question:
A: What is the NPV of each investment? Which investment (if either) should be the company undertake?
B: David approached Diane for a favor, David says that the solar lighting project is a pet project of his boss, and David really wants to get the project approved to curry favor with his boss.He suggests to Diane that they will roll their two projects into a single proposal. The cash flows for this combined project would simply equal the sum of the two individual projects.
Calculate the NPV of the combined project? Does it appear to be worth doing?
Would you recommend investing in the combined project?
C: What is the Ethical issue that Diane faces? Is any harm done if she does the favor for David as he asks?
10% discount rate.
Year | LED project | Solar project |
---|---|---|
0 | -$4,200,000 | -$500,000 |
1 | 700,000 | 60,000 |
2 | 700,000 | 60,000 |
3 | 700,000 | 60,000 |
4 | 700,000 | 60,000 |
5 | 1,000,000 | 60,000 |
6 | 700,000 | 60,000 |
7 | 700,000 | 60,000 |
8 | 700,000 | 60,000 |
9 | 700,000 | 60,000 |
10 | 700,000 | 60,0000 |
Discovering Advanced Algebra An Investigative Approach
ISBN: 978-1559539845
1st edition
Authors: Jerald Murdock, Ellen Kamischke, Eric Kamischke