Finance case study

Question A B C

Valuing Capital Investment Projects 1. Growth Enterprises, Inc. (GED has $40 million that it can invest in any or all of the four capital investment projects, which have cash flows as shown in Table 1 below Table 1 Comparison of Project Cash Flows $thousands) Year of Cash Flow Type of Cash Flow Project Year 0 Year 1 Year 2 Year 3 Investment Revenue Operating expenses A. ($10,000) $21,000 11,000 ($10,000) Investment Revenue Operating expenses $15,000 5,833 $17,000 7,833 C. ($10,000) Investment Revenue Operating expenses $10,000 5,555 $11,000 4,889 $30,000 15,555 D. ($10,000) Investment Revenue Operating expenses $30,000 15,555 can be considered cash items. $10,000 5,555 $5,000 2,222 All revenues and co rating ex Each of these projects is considered to be of equivalent risk. The investment will be depreciated to zero on a straight-line basis for tax purposes. GEl's marginal corporate tax