In: Accounting
A manager of “Safola Co. “ ask your advice to evaluate 4 projects, consider the following information to determine the project the manager should be select by the following criteria’s:
Projects |
A |
B |
C |
Cost |
100000 |
150000 |
200000 |
Expected of cash inflows |
20000 |
25000 |
30000 |
Life( years) |
7 |
9 |
10 |
Level of risk ( c.v) |
0.24 |
0.34 |
0.18 |
Safola Co. usually uses the following discount rates 10%, 7%, 12%, and certainty factors 0.633, 0.742, 0.543.
please Answer with full details .
. | Projects | A | B | C |
a | Cost | $ (100,000.00) | $ (150,000.00) | $ (200,000.00) |
b | Expected Cash inflow | $ 20,000.00 | $ 25,000.00 | $ 30,000.00 |
c | Certainity factor | 0.633 | 0.742 | 0.543 |
d | Riskless cash inflow (b x c) | $ 12,660.00 | $ 18,550.00 | $ 16,290.00 |
e | Dscount rate | 10% | 7% | 12% |
f | PV annuity factor | 4.8684 | 6.5152 | 5.6502 |
g | PV of Cash flows (d x f) | $ 61,633.94 | $ 120,856.96 | $ 92,041.76 |
h | NPV (a - g) | $ (38,366.06) | $ (29,143.04) | $ (107,958.24) |