QUESTION 4 You lead the project selection team at SG international group. Your team is exploring three separate investment projects. SG international group anticipates a 20 % return based on prior performance. Your financial analysts estimate that inflation will remain at 2 % for the foreseeable future. Considering the following cash flow projections about each project, which Project should be SG international group's top priority? Should SG international group support any of the other projects? If so, what should be the order of priority in terms of return on investment? Project: J Year 0 1 2 3 5 Project: V Year 0 1 2 3 Project: C Year 0 1 2 4 Investment K13,500,000 Investment K9,000,000 Investment K4,500,000 Revenue Stream 0 13,500,000 1,687,500 450,000 337,500 225,000 Revenue Stream 0 9,000,000 2,250,000 562,500 450,000 225,000 Revenue Stream 0 4,500,000 2,812,500 1,687,500 450,000 225,000
QUESTION 4 You lead the project selection team at SG international group. Your team is exploring three separate investment projects. SG international group anticipates a 20 % return based on prior performance. Your financial analysts estimate that inflation will remain at 2 % for the foreseeable future. Considering the following cash flow projections about each project, which Project should be SG international group's top priority? Should SG international group support any of the other projects? If so, what should be the order of priority in terms of return on investment? Project: J Year 0 1 2 3 5 Project: V Year 0 1 2 3 Project: C Year 0 1 2 4 Investment K13,500,000 Investment K9,000,000 Investment K4,500,000 Revenue Stream 0 13,500,000 1,687,500 450,000 337,500 225,000 Revenue Stream 0 9,000,000 2,250,000 562,500 450,000 225,000 Revenue Stream 0 4,500,000 2,812,500 1,687,500 450,000 225,000
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:QUESTION 4
You lead the project selection team at SG international group. Your team is exploring three
separate investment projects. SG international group anticipates a 20 % return based on prior
performance. Your financial analysts estimate that inflation will remain at 2 % for the foreseeable
future.
Considering the following cash flow projections about each project, which Project should be SG
international group's top priority? Should SG international group support any of the other projects?
If so, what should be the order of priority in terms of return on investment?
Project: J
Year
0
1
2
3
5
Project: V
Year
0
1
2
3
Project: C
Year
0
1
2
4
Investment
K13,500,000
Investment
K9,000,000
Investment
K4,500,000
Revenue Stream
0
13,500,000
1,687,500
450,000
337,500
225,000
Revenue Stream
0
9,000,000
2,250,000
562,500
450,000
225,000
Revenue Stream
0
4,500,000
2,812,500
1,687,500
450,000
225,000
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