Can you solve that by explaining? 1. A company is considering investing in three...
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Can you solve that by explaining?
1. A company is considering investing in three projects. If we fully invest in a project, the NPV (in millions of dollars) are as shown in the following table (For example, project 1 requires cash outflow of $2 million today and returns $5 million at the end of 4th year). At time 0 , we have $4 million in cash. At each time point ( 0,1,2,3 and 4 years from today) leftover cash earns 1% annual interest. For example, if after investing at time 0 we have $1 million we would receive $10,000 in interest at time 1 . The company's goal is to maximize cash on hand at the end of 4th year. What investment strategy should be used? Remember that we may invest in a fraction of a project. For example, if we invest in 0.5 of project 3 , then we have cash outflows of $1 million at time 0 and 1
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