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Interstate Appliance Inc is considering the following 3 mutually exclusive projects Projected cash flows for these ventures are as follows Plan A Plan B Plan C Initial Initial Initial Outlay

Interstate Appliance Inc. is considering the following 3 mutually exclusive projects. Projected cash flows for these ventures are as follows:

Plan A Plan B Plan C
Initial Initial Initial
Outlay=$3,600,000 Outlay=$6,000,000 Outlay=$3,500,000
Cash Flow: Cash Flow: Cash Flow:
Yr 1=$ -0- Yr 1=$4,000,000 Yr 1=$2,000,000
Yr 2= -0- Yr 2= 3,000,000 Yr 2= -0-
Yr 3= -0- Yr 3= 2,000,000 Yr 3=2,000,000
Yr 4= -0- Yr 4= -0- Yr 4=2,000,000
Yr 5=$7,000,000 Yr 5= -0- Yr 5=2,000,000

If Interstate Appliance has a 12% cost of capital, what decision should be made regarding the projects above?

   

accept plan A

   

accept plan B

   

accept plan C

   

accept Plans A, B and C

 

Apr 29 2020 View more View Less

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