A manager of “Safola Co. “ ask your advice to evaluate 4 projects, consider the following...

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:

Risk Adjusted Discount Rate RADR
Equivalent Certainty Factor CF

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 .

Expert Solution

.	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)

ekkarill92 answered 3 years ago

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