You have a $1 million capital budget and must make the decision about which investments your firm
Fantastic news! We've Found the answer you've been seeking!
Question:
You have a $1 million capital budget and must make the decision about which investments your firm should undertake for the coming year. There are three projects available and the cash flows of each project appear below. Assume a cost of capital of 12%. Which project or projects do you select?
| | Project 1 | Project 2 | Project 3 |
| Cash flow | | | |
| Year 0 | -$400,000 | -$500,000 | -$1,000,000 |
| Year 1 | 200,000 | 300,000 | 500,000 |
| Year 2 | 300,000 | 350,000 | 700,000 |
| Year 3 | 300,000 | 350,000 | 700,000 |
Expert Answer:
Project 1 Year Cash Flow PVF 12 NPV 0 400000 1 400000 1 200000 0893 178600 2 300000 0... View the full answer
Related Book For 
Introduction to Corporate Finance What Companies Do
ISBN: 978-1111222284
3rd edition
Authors: John Graham, Scott Smart
Posted Date:
