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Business, 04.01.2020 06:31 dancinggrace2032

You are a consulting firm intern and your job is to a client choose investment projects. your client, realestate, is a young and growing commercial and residential real estate firm. after reading through all the related information of those projects, you have compiled the following cash flow projections:

col1 cf0 cf1 cf2 cf3
col2 project 1 100 50 50 50
col3 project 2 -80 40 45 50
col4 project 3 -70 30 40 50
col5 project 4 -60 30 40 60
col6 project 5 -50 25 30 70

cf0 denotes the initial investment. cf1 is the cash flow at the end of the first year. cf2 is the cash flow at the end of the second year, and so on. the units are millions of dollars.

if realestate accepts projects with payback periods of 2 years or less, which project should you reject?

(a)project 1
(b)project 2
(c)project 3
(d)project 4
(e)project 5
(f)none

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Answers: 3

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