Investor group offered three proposals: a) To invest $2,300,000 on this product with annual O&M of $45,000
Question:
Investor group offered three proposals:
a) To invest $2,300,000 on this product with annual O&M of $45,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $750,000, over 4 years period with interest rate of 12 %.
b) To invest $1,800,000 on this product with annual O&M of $75,000 starting end of year one. The proposal is expected to result in annual benefit in cash flow of $715,000, over 7 years period with interest rate of 12 %.
c)To invest $1,500,000 on this product with annual O&M of $90,000 starting end of year one. The proposal is expected to result in benefit in cash flow of $120,000 first year, which increases by $50000 yearly over 28 years period with interest rate of 12 %.
Which proposal you should accept? please use the present worth analysis and please provide the cash flow diagrams for each proposal.
Financial Management for Public Health and Not for Profit Organizations
ISBN: 978-0132805667
4th edition
Authors: Steven A. Finkler, Thad Calabrese