Question: Your company has 3 potential Software projects to choose from. Because of resource constraints and financial limitations, your company can only choose 1 out of
- Your company has 3 potential Software projects to choose from. Because of resource constraints and financial limitations, your company can only choose 1 out of 3 projects. The software product for each project will be available for 3 years until decommissioned and retired. The software is expected to help generate significant annual cash flow for your company during these 3years. You have 3 project choices. (See table below).
(Calculate NPV values for Choice 1, 2 and 3. (Describe in full detail, step by step)
( Calculate IRR values for Choice 1, 2 and 3. (Describe in full detail, step by step)
Which Project Choice makes the most sense and Why?
Show all the necessary steps in detail
| Project Choice 1 | Project Choice 2 | Project Choice 3 |
| Year 0 Initial Cost $1 Million | Year 0 Initial Cost $250,000 | Year 0 Initial Cost $500,000 |
| Year 1 Cash flow $500,000 | Year 1 Cash flow $200,000 | Year 1 Cash flow $1.5 Million |
| Year 2 Cash flow $1 Million | Year 2 Cash flow $800,000 | Year 2 Cash flow $750,000 |
| Year 3 Cash flow $1.25 Million | Year 3 Cash flow $1 Million | Year 3 Cash flow $0 (zero) |
| NOTE: The Discount Rate is 7% | ||
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