Homework SourseThe following table represents in millions of dollars three
The following table represents (in millions of dollars) three potential projects that your firm is considering. Use the following table to answer the questions below:
What is the NPV of Project Beta if the risk of the project is assessed at 9%?
42.5 million
46.0 million
48.3 million
55.6 million
| Projects | Investment | 1 | 2 | 3 | 4 | 5 |
| Alpha | 80 | 20 | 40 | 50 | 55 | 60 |
| Beta | 30 | 5 | 25 | 30 | 20 | 20 |
| Gamma | 100 | 40 | 40 | 40 | 40 | 40 |
Solution
Answer: 46 million
| Discount rate | 9% |
| Particulars | Cash flow |
| Investment | -30 |
| 1 | 5 |
| 2 | 25 |
| 3 | 30 |
| 4 | 20 |
| 5 | 20 |
| NPV | 46 |
