Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It...
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Accounting
Hanmi Group, a consumer electronics conglomerate, is reviewing its annual budget in wireless technology. It is considering investments in three different technologies to develop wireless communication devices. Consider the following cash flows of the three independent projects available to the company. Assume the discount rate for all projects is 9 percent. Further, the company has only $20 million to invest in new projects this year.
Cash Flows (in $ millions)
Year CDMA G4 Wi-Fi
0 $6 $14 $20
1 11 11 17
2 8.5 25 33
3 3.5 20 20
A. Calculate the profitability index for each investment.
Profitability Index
CDMA
G4
Wi-Fi
B. Calculate the NPV for each investment.
NPV
CDMA
G4
Wi-Fi
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