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A snack food manufacturer is planning to introduce three products simultaneously. Investments and per year cash flow are given for each:
Cash Flow Per Year
Initial Investment For 5 Years Payback
Note that according to the payback rule, Project Popcorn is best. What about NPV? Which of the following correctly ranks the NPV of these 3 projects – from highest NPV to lowest NPV? Use a required rate of return of 10% for each project.
A: Potato Chips, Granola Bars, Popcorn
B: Granola Bars, Popcorn, Potato Chips
C: Granola Bars, Potato Chips, Popcorn
D: Popcorn, Potato Chips, Granola Bars
E: Potato Chips, Popcorn, Granola Bars
Which of the following comes closest to the IRR for the Popcorn Project?