Question: Net Present Value (NPV) Calculation with Multiple Investment Projects : A company is evaluating three investment projects with the following cash flows: Project A: Initial
Net Present Value (NPV) Calculation with Multiple Investment Projects: A company is evaluating three investment projects with the following cash flows:
Project A: Initial investment of $200,000, cash flows of $50,000 per year for 5 years. Project B: Initial investment of $300,000, cash flows of $80,000 per year for 7 years. Project C: Initial investment of $400,000, cash flows of $120,000 per year for 10 years.
Using a discount rate of 10%, calculate the net present value (NPV) for each project and recommend the optimal combination of projects to maximize shareholder value. Discuss how project interdependencies and capital constraints influence investment decisions.
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