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(Ignore Income Taxes in This Problem

question 129

Essay

(Ignore income taxes in this problem.) 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:

Johnstown

A city in Pennsylvania, USA, historically known for the Johnstown Flood of 1889, one of the deadliest disasters in American history.

Winston-Salem

A city in North Carolina, USA, known for its historical tobacco industry and cultural sites.

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Residential areas located on the outskirts of cities or large towns, typically characterized by lower population density and more single-family homes than urban centers.

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Residential areas characterized by the abundance of trees along streets and in public spaces, contributing to aesthetic appeal, shade, and environmental benefits.

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