Pierre Bouvier is evaluation four projects: cash flow and NP
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B5. (Investment criteria) Pierre Bouvier is evaluating four projects. The cash flows for the four
projects are given here.
a. Pierre thinks you can rank these projects from best to worst by simply inspecting the
cash flows (and not calculating anything). Try to do so.
b. Pierre next found the NPV of each project, discounting future cash flows at 10%. What
is the NPV for each project?
c. Do your rankings in parts a and b agree?
TIME 0 1 2 3 4
Project K −100 40 40 40 40
Project L −100 40 80 0 40
Project M −90 40 80 0 30
Project N −90 40 80 0 40
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Solution Summary
The expert examines Pierre Bouvier evaluating four projects. The cash flows for the four projects were determined.
Education
- Chartered Accountant (Equivalent to CPA in US), Institute of Charted Accountants of India
- Bachelor of Commerce, West Bengal University
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