Consider the Following Three Investment Opportunities

question 94

Essay

Consider the following three investment opportunities:
Project I would require an immediate cash outlay of $10,000 and would result in cash savings of $3,000 each year for 5 years.
Project II would require cash outlays of $3,000 per year and would provide a cash inflow of $30,000 at the end of 5 years.
Project III would require a cash outlay of $10,000 now and would provide a cash inflow of $30,000 at the end of 5 years.
Required:
The discount rate is 14%. Use the net present value method to determine which, if any, of the three projects is acceptable.

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Definitions:

Self-Actualization

The realization or fulfillment of one's talents and potentialities, considered as a drive or need present in everyone.

Reshoring

The practice of bringing back manufacturing and services to a company's original country from overseas to create jobs, reduce supply chain risks, and improve quality control.

Technical Support

Assistance provided by companies to users of technology products or services in solving specific problems or errors.

In-House Function

A task or operation that is performed within an organization by its own members or employees rather than outsourced to an external provider.