Question: Three new projects are proposed for a new start-up company. Project 1 will cost $300,000 to develop and will have an annual cash flow of

  1. Three new projects are proposed for a new start-up company. Project 1 will cost $300,000 to develop and will have an annual cash flow of $35,000. Project 2 will cost $200,000 and is projected to have an annual cash flow of $40,000.Project 3 will cost $50,000 and is expected to have an annual ash flow of $10,000. The company is very concerned about their cash flow. Using the payback method which project is better from a cash flow standpoint and why?
  2. A five - year project has a projected net cash flow of $20,000, $15,000, $20,000, $20,000, and $25,000 in the next five years. It will cost $75,000 to implement the project. If the required rate of return is 20%, conduct a discounted cash flow calculation to determine the NPV.

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