Question 21 (2 points)

Based on the following information calculate which project is preferable from a net present point of view and in one brief sentence explain your answer.

Initial investment

Recovery of capital cost form CA

Inflow (Outflow) by Case

Case A

(3,000,000)

900,000

Case B

(2,700,000)

810,000

Case C

(2,400,000)

720,000

Sales

Cost of sales

Administrative expense

Interest expense

Income Taxes

6,000,000

(2,880,000)

(1,800,000)

0

(396,000)

5,400,000

(2,160,000)

(1,620,000)

(216,000)

(421,200)

4,800,000

(1,920,000)

(1,440,000)

0

(432,000)

Annuity factor

4

4

4