The following projects are available to a company:
Project A: $40,000 cost, $12,000 cash inflows for 4 years
Project B: 36,500 cost, $5,000 cash inflows for first 4 years followed by 3 years of $11,000 cash inflows
Project C: $50,000 cost, $10,000 cash inflow in year 1, increasing by $1,500 per year for 4 more years
Project D: $25,000 cost, $20,000 cash outflow in year 1, $50,000 cash inflow in year 2
1) Assuming the company’s co of capital is 7%, calculate the NPN and IRR of each project.
2) Using the NPV criterion, which project should be pursued?
3) Using the IRR criterion, which project should be pursued?
4) Assume you are limited to spending only $100,000 up front on all projects. Which project should be pursued