potential investment projects

potential investment projects

Your firm has identified three potential investment projects. The projects and their cash flows are shown here:

potential investment projects

Cash Flow Cash Flow
Project Today ($) in One Year ($)
A -10 20
B 5 5
C 20 -10
Suppose all cash flows are certain and the risk-free interest rate is 10%.

a.
What is the NPV of each project

b. If the firm can choose only one of these projects, which should it choose?

c. If the firm can choose any two of these projects, which should it choose?

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