| Investment Appraisal - Exercise 3.8 | Unnamed: 1 | Unnamed: 2 | SOLUTION |
|---|---|---|---|
| Project | A | B | C |
| Original Equity Investment | 20 | 20 | 20 |
| Cash Inflows from Projects: | |||
| Year 1 | 10 | 5 | 2 |
| Year 2 | 8 | 5 | 5 |
| Year 3 | 6 | 5 | 8 |
| Year 4 | 4 | 5 | 10 |
| Year 5 | 2 | 6 | 10 |
| Total Cash Inflow | 30 | 26 | 35 |
| Depreciation | 20 | 20 | 20 |
| Profit | 10 | 6 | 15 |
| Average Profit | 2 | 1.2 | 3 |
| ARR (based on Original Investment) | 0.1 | 0.06 | 0.15 |
| Under ARR Project C should | |||
| be chosen. |