Insigne Corporation is considering two investment projects (projects A and project B) that are mutually exclusive. Project A requires an initial cash out flow of $10,000,000 today and Project B requires an initial cash out flow of $15,000,000 today. The expected end-of-year cash inflows of each project are given in the following table:
|Year||Cash Inflow project A||Cash Inflow project B|
Weighted average cost of capital is 13% for both projects.
Which project should Insigne Corporation take? Please explain why
A factory cost $330,000. You forecast that it will produce cash inflows of $105,000 in year 1, $165,000 in year 2, and $270,000 in year 3. The discount rate is 11%.
What is the value of the factory?