The Sedlik Group is considering three investment opportunities with cash flows as described below. Ignore...
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| The Sedlik Group is considering three investment opportunities with cash flows as described below. Ignore income taxes in this problem. PROJECT RX17: CASH INVESTMENT NOW $15,000 CASH INFLOW END OF YEAR 5 $21,000 CASH INFLOW END OF YEAR 8 $21,000 PROJECT BQ81: CASH INVESTMENT NOW $16,000 ANNUAL CASH OUTFLOW FOR 5 YEARS $3,000 CASH INFLOW END OF YEAR 5 $21,000 PROJECT MP12: CASH INVESTMENT NOW $31,000 ANNUAL CASH INFLOW FOR 4 YEARS $11,000 CASH OUTFLOW END OF YEAR 3 $5,000 ADDITIONAL CASH INFLOW END OF YEAR 4 $11,000 REQUIRED: 1. DRAW A TIME LINE GRAPH FOR EACH PROJECT. 2. COMPUTE THE NET PRESENT VALUE FOR EACH PROJECT USING A 12% DISCOUNT RATE. 3. RANK THE PROJECTS. 4. SINCE THE SEDLIK GROUP ONLY HAS A CAPITAL FUND OF $50,000, WHICH PROJECTS SHOULD THEY PURSUE?PROJECT RX17 INITIAL INVESTMENT = ___________ PROJECT BQ81 INITIAL INVESTMENT = ___________ PROJECT MP12 INITIAL INVESTMENT = ___________ TOTAL = TOTAL INITIAL CAPITAL INVESTMENT CANNOT EXCEED $50,000 |
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