2. Company A has three projects (C, D and E) which show positive NPV. But Company...

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2. Company A has three projects (C, D and E) which show positive NPV. But Company does not have enough money to invest in all three projects. So, it decides by the management to know which project increases financial position of the company. Particulars Initial Cash inflows (OMR) Cash Cash Risk free Risk investment inflows inflows rate premium (OMR) (OMR) 1" year 2nd year 3rd year Project C 56, 000 25, 000 10, 000 15, 000 2% Project D 50, 000 32, 000 12, 000 41, 000 2% 4% Project E 85, 000 12, 000 30, 000 53, 000 3% 7% Required: Calculate NPV with risk-adjusted discount rate and give your recommendation to the company management. (3 marks) 2. Company A has three projects (C, D and E) which show positive NPV. But Company does not have enough money to invest in all three projects. So, it decides by the management to know which project increases financial position of the company. Particulars Initial Cash inflows (OMR) Cash Cash Risk free Risk investment inflows inflows rate premium (OMR) (OMR) 1" year 2nd year 3rd year Project C 56, 000 25, 000 10, 000 15, 000 2% Project D 50, 000 32, 000 12, 000 41, 000 2% 4% Project E 85, 000 12, 000 30, 000 53, 000 3% 7% Required: Calculate NPV with risk-adjusted discount rate and give your recommendation to the company management. (3 marks)

Answer rating: 100% (QA)

Risk adjusted discount rate Risk free rate Risk premium NPVPresent ... View the full answer