Selection of investment opportunities under NPV.
Monson Company is considering three investment opportunities with cash flows as described below:
|
Project A
|
|
Cash investment now
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$15,000
|
|
Cash inflow at the end of 5 years
|
$21,000
|
|
Cash inflow at the end of 8 years
|
$21,000
|
|
Project B
|
|
Cash investment now
|
$11,000
|
|
Annual Cash outflow for 5 years
|
$3,000
|
|
Additional Cash inflow at the end of 5 years
|
$21,000
|
|
Project C
|
|
Cash investment now
|
$21,000
|
|
Annual Cash outflow for 4 years
|
$11,000
|
|
Cash inflow at the end of 3 years
|
$5,000
|
|
Additional Cash inflow at the end of 4 years
|
$15,000
|
Required:
Compute the net present value of each project assuming Monson Company uses a 12% discount rate.