Assume that you are an investor, and the management of Bitter Inc. and Sour Inc. has...

Assume that you are an investor, and the management of Bitter Inc. and Sour Inc. has approached you asking for an investment of $480,000 and $530,000 respectively. The management has offered the following expected cash flows in the future: The management of Bitter Inc. has contemplated that it would need an additional support of $45,000 at the end of 8th year, and Sour Inc. would ask for an additional investment of $38,000 at the end of 10th year. Assume your expected return on investment to be 6%. Analyze both the investment proposals using the following criteria: 1. Net present value 2. Payback period 3. Discounted payback period

year	Bitter Inc.	Sour Inc.
1	17400	-
2	24800	-
3	51300	19000
4	73600	61000
5	82000	78000
6	99000	108000
7	112000	141000
8	119000	172000
9	126900	185000
10	101000	199000
11	99500	103000
12	76900	45000
13	62700	33000
14	44000	22000
15	35000	11000

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Expert Solution

Please find the attached sheets for detailed calculation,

Even then you find it difficult to analyse then you can comment me, I will respond you,

Thanks,

ekkarill92 answered 1 year ago

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