1. Consider an investment which has the following cash flows:
|
A |
B |
C |
|
|
Investment (I) |
$30,000 |
$20,000 |
$50,000 |
|
Useful life |
10 |
4 |
20 |
|
Annual cash savings |
$ 6,207 |
$ 7,725 |
$ 9,341 |
Rank the projects according to their attractiveness using the following:
(a) Payback period
(b) IRR
(c) NPV at 14 percent cost of capital