Explore BrainMass

Explore BrainMass

    Evaluate alternative investments for a company

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A company is considering the following investment opportunities (ABC)

    Investment Initial cost NPV@15% Expected life IRR
    A. $5,500,000 340,000 10 years 20%
    B. $3,000,000 300,000 10 years 30%
    C. $2,000,000 200,000 10 years 40%

    A. If the company can raise large amounts of money at an annual cost of 15%, and if the investments are independent of one another, which should it undertake?

    B. If the company can raise large amounts of money at an annual cost of 15%, and if the investments are mutually exclusive, which should it undertake?

    C. If the company has a fixed capital budget of $5.5 million, and if the investments are independent of one another, which should it undertake?

    © BrainMass Inc. brainmass.com June 4, 2020, 1:50 am ad1c9bdddf
    https://brainmass.com/business/net-present-value/evaluate-alternative-investments-company-421945

    Solution Preview

    a. If the investments are independent of one another, Investment A, B & C should be accepted, because all of them ...

    Solution Summary

    This solution provides a detailed step by step explanation of the given finance problem.

    $2.19

    ADVERTISEMENT