A company has the opportunity to do any, none, or all of the projects for which the net cash flows per year are shown below. The company has a cost of capital of 12%. Which should the company do and why?

Challenge B: -$30,000 + $75,000

Challenge C: -$60,000 + $90,000

The corporate ought to do all three initiatives as they’re all optimistic web money circulate initiatives. Challenge A has the best web current worth (NPV) of roughly $136 thousand {dollars} and due to this fact offers the best return for the corporate. Nevertheless, Tasks B and C are additionally worthwhile investments with NPVs of roughly $39 and $17 thousand respectively. By investing in these three initiatives collectively the corporate can profit from a mixed NPV of round $193 thousand which exceeds their price of capital (12%) by over 8%. Due to this fact it could be prudent for them to pursue all three initiatives concurrently to be able to maximize their earnings.