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QUESTION 4 You lead the project selection team at SG international group. Your team is exploring three separate investment projects. SG international group anticipates a 20 % return based on prior performance. Your financial analysts estimate that inflation will remain at 2 % for the foreseeable future. Considering the following cash flow projections about each project, which Project should be SG international group's top priority? Should SG international group support any of the other projects? If so, what should be the order of priority in terms of return on investment? Project: J Year 0 1 2 3 5 Project: V Year 0 1 2 3 Project: C Year 0 1 2 4 Investment K13,500,000 Investment K9,000,000 Investment K4,500,000 Revenue Stream 0 13,500,000 1,687,500 450,000 337,500 225,000 Revenue Stream 0 9,000,000 2,250,000 562,500 450,000 225,000 Revenue Stream 0 4,500,000 2,812,500 1,687,500 450,000 225,000

QUESTION 4 You lead the project selection team at SG international group. Your team is exploring three separate investment projects. SG international group anticipates a 20 % return based on prior performance. Your financial analysts estimate that inflation will remain at 2 % for the foreseeable future. Considering the following cash flow projections about each project, which Project should be SG international group's top priority? Should SG international group support any of the other projects? If so, what should be the order of priority in terms of return on investment? Project: J Year 0 1 2 3 5 Project: V Year 0 1 2 3 Project: C Year 0 1 2 4 Investment K13,500,000 Investment K9,000,000 Investment K4,500,000 Revenue Stream 0 13,500,000 1,687,500 450,000 337,500 225,000 Revenue Stream 0 9,000,000 2,250,000 562,500 450,000 225,000 Revenue Stream 0 4,500,000 2,812,500 1,687,500 450,000 225,000

Corporate Fin Focused Approach
Corporate Fin Focused Approach
5th Edition
ISBN:9781285660516
Author:EHRHARDT
Publisher:EHRHARDT
Chapter10: The Basics Of Capital Budgeting: Evaluating Cash Flows
Section: Chapter Questions
Problem 23SP
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QUESTION 4 You lead the project selection team at SG international group. Your team is exploring three separate investment projects. SG international group anticipates a 20 % return based on prior performance. Your financial analysts estimate that inflation will remain at 2 % for the foreseeable future. Considering the following cash flow projections about each project, which Project should be SG international group's top priority? Should SG international group support any of the other projects? If so, what should be the order of priority in terms of return on investment? Project: J Year 0 1 2 3 5 Project: V Year 0 1 2 3 Project: C Year 0 1 2 4 Investment K13,500,000 Investment K9,000,000 Investment K4,500,000 Revenue Stream 0 13,500,000 1,687,500 450,000 337,500 225,000 Revenue Stream 0 9,000,000 2,250,000 562,500 450,000 225,000 Revenue Stream 0 4,500,000 2,812,500 1,687,500 450,000 225,000
Transcribed Image Text:QUESTION 4 You lead the project selection team at SG international group. Your team is exploring three separate investment projects. SG international group anticipates a 20 % return based on prior performance. Your financial analysts estimate that inflation will remain at 2 % for the foreseeable future. Considering the following cash flow projections about each project, which Project should be SG international group's top priority? Should SG international group support any of the other projects? If so, what should be the order of priority in terms of return on investment? Project: J Year 0 1 2 3 5 Project: V Year 0 1 2 3 Project: C Year 0 1 2 4 Investment K13,500,000 Investment K9,000,000 Investment K4,500,000 Revenue Stream 0 13,500,000 1,687,500 450,000 337,500 225,000 Revenue Stream 0 9,000,000 2,250,000 562,500 450,000 225,000 Revenue Stream 0 4,500,000 2,812,500 1,687,500 450,000 225,000
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