Management of Frisco Films is considering the following capital projects: Assume that all projects have no salvage

Question:

Management of Frisco Films is considering the following capital projects:

Assume that all projects have no salvage value and that the firm uses a discount rate of 10 percent. Management has decided that only $25,000,000 can be spent in the current year for capital projects.
a. Determine the net present value, profitability index, and internal rate of return for each of the seven projects.
b. Rank the seven projects according to each method used in (a).
c. Indicate how you would suggest to the management of Frisco Films that the money be spent. What would be the total net present value of your selected investments?

Net Present Value
What is NPV? The net present value is an important tool for capital budgeting decision to assess that an investment in a project is worthwhile or not? The net present value of a project is calculated before taking up the investment decision at... Internal Rate of Return
Internal Rate of Return of IRR is a capital budgeting tool that is used to assess the viability of an investment opportunity. IRR is the true rate of return that a project is capable of generating. It is a metric that tells you about the investment... Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...