Yard Works owns multiple gardening supply stores in Vancouver and is planning upgrades in some locations. These are the four independent projects they are considering: Project A: Initial cost of $300,000; Revenues/Cost savings of $150,000 in year 1, and $120,000 in years 2 and 3. Project B: Initial cost of $360,000; Revenues/Cost savings of $40,000 in year 2, and $200,000 in years 3 to 5. Project C: Initial cost of $210,000; Revenues/Cost savings of $10,000 in years 1 and 2, $100,000 in year 3, and $120,000 in years 4 and 5. Project D: Initial cost of $125,000; Revenues/Cost savings of $30,000 in year 1, and $10,000 in each quarter in years 2 to 5. If the owners of Yard Works have $700 000 to invest in these projects, and they expect at least 12% return on all of their projects, in which project or combination of multiple projects should they invest?

Yard Works owns multiple gardening supply stores in Vancouver and is planning upgrades in some locations. These are the four independent projects they are considering: Project A: Initial cost of $300,000; Revenues/Cost savings of $150,000 in year 1, and $120,000 in years 2 and 3. Project B: Initial cost of $360,000; Revenues/Cost savings of $40,000 in year 2, and $200,000 in years 3 to 5. Project C: Initial cost of $210,000; Revenues/Cost savings of $10,000 in years 1 and 2, $100,000 in year 3, and $120,000 in years 4 and 5. Project D: Initial cost of $125,000; Revenues/Cost savings of $30,000 in year 1, and $10,000 in each quarter in years 2 to 5. If the owners of Yard Works have $700 000 to invest in these projects, and they expect at least 12% return on all of their projects, in which project or combination of multiple projects should they invest?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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