You are a project manager for your company and you are faced with five potential projects that you can invest in. Free cash flow projections and additional relevant data and given for each project in the table below. Assume that there are no cash flows after year 3. Assume that you can only take each project once and that you can only choose project. Which project would you invest in? Select the best answer. Project Project A Project B Project C Project D Project E O I. Project A O II. Project B O III. Project C O IV. Project D O V. Project E FCF Forecasts by Year (in $1,000) 2 1 500 0 (400) (400) (300) (250) (300) 75 60 75 135 115 175 3 650 210 190 200 Interest Rate (EAR) 8.0% 10.0% 10.0% 12.0% 12.0% IRR 25.00% 17.57% 15.92% 17.81% 19.96%

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
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You are a project manager for your company and you are faced with five potential projects that you can invest in. Free cash flow projections and additional relevant data are
given for each project in the table below. Assume that there are no cash flows after year 3. Assume that you can only take each project once and that you can only choose one
project. Which project would you invest in? Select the best answer.
Project
Project A
Project B
Project C
Project D
Project E
O I. Project A
II. Project B
III. Project C
IV. Project D
O V. Project E
FCF Forecasts by Year (in $1,000)
0
2
1
500
(400)
(400)
(300)
(250)
(300)
75
60
75
135
115
175
3
650
210
190
200
Interest Rate (EAR)
8.0%
10.0%
10.0%
12.0%
12.0%
IRR
25.00%
17.57%
15.92%
17.81%
19.96%
Transcribed Image Text:You are a project manager for your company and you are faced with five potential projects that you can invest in. Free cash flow projections and additional relevant data are given for each project in the table below. Assume that there are no cash flows after year 3. Assume that you can only take each project once and that you can only choose one project. Which project would you invest in? Select the best answer. Project Project A Project B Project C Project D Project E O I. Project A II. Project B III. Project C IV. Project D O V. Project E FCF Forecasts by Year (in $1,000) 0 2 1 500 (400) (400) (300) (250) (300) 75 60 75 135 115 175 3 650 210 190 200 Interest Rate (EAR) 8.0% 10.0% 10.0% 12.0% 12.0% IRR 25.00% 17.57% 15.92% 17.81% 19.96%
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