Monson Company Is Considering Three Investment Opportunities with Cash Flows

question 52

Essay

Monson Company is considering three investment opportunities with cash flows as described below: (Ignore income taxes in this problem.)
$\begin{array}{|l|r|}\hline \text { Project A: Cash investment now } & \$ 15,000 \\\hline \text { Cash inflow at the end of 5 years } & \$ 21,000 \\\hline \text { Cash inflow at the end of 8 years } & \$ 21,000 \\\hline \text { Project A: Cash investment now } & \$ 11,000 \\\hline \text { Cash outflow for 5 years } & \$ 3,000 \\\hline \text { Addition cash inflow at the end of 5 year's } & \$ 21,000 \\\hline \text { Project A: Cash investment now } & \$ 21,000 \\\hline \text { Cash inflow at the end of 4 years } & \$ 11,000 \\\hline \text { Cash outflow for 3 years } & \$ 5,000 \\\hline \text { Addition cash inflow at the end of 4 years } & \$ 15,000 \\\hline\end{array}$
Required:
Calculate the net present value of each project assuming Monson Company uses a 12% discount rate.

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Definitions:

Force-Coercion Strategy

A method of change management where power, authority, or threats are used to achieve compliance or enforce change.

Unilateral Action

An action or decision made by one party or nation without the agreement or cooperation of others.

Shared Power Strategy

An approach in decision-making or governance where power and responsibilities are distributed among various stakeholders or groups, rather than centralized.

Reward Power

The authority or influence one possesses due to their ability to give rewards to others for compliance or desirable behaviors.