ANZS Limited has $6 million at its disposal and the management is considering the following projects for
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Question:
ANZS Limited has $6 million at its disposal and the management is considering the following projects for investment. The CFO has prepared the following table for the board of which you are a member.
Project A | Project B | Project C | |
Initial investment | $3,000,000 | $3,500,000 | $2,700,000 |
Net present value | $5,000,000 | $3,500,000 | $5,400,000 |
IRR | 20% | 12% | 18% |
The CFO further told the board that the company's cost of capital is 10%.
Questions:
What would be your investment decision if the projects are (a) mutually exclusive, or (b) independent?
Explain your answer in details.
Related Book For
Managing Supply Chain and Operations An Integrative Approach
ISBN: 978-0132832403
1st edition
Authors: Thomas Foster, Scott E. Sampson, Cynthia Wallin, Scott W Webb
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