Exhibit 2: Global Green Energy (GGE) is considering three new investment projects presented below. The...
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Exhibit 2: Global Green Energy (GGE) is considering three new investment projects presented below. The firm's CFO has calculated the initial investment and first five year cashflows for each project. Based on Global Green Energy's previous experience and industry standards, the firm uses two different hurdle rates for solar and wind energy projects. These costs of capital are 15% and 12.5% respectively. Annual Cashflows (in USD Ms) Initial Investment Projects Year 1 Year 2 Year 3 Year 4 Year 5 Solar A Solar B Wind C -25 -50 -25 6 10 5 8 15 7 10 20 9 12 25 11 12 30 13 Cost of Capital Solar 15.0% Wind 12.5% 15. Refer to Exhibit 2 above. Calculate the NPVs of all three projects and assess the relative attractiveness of each project. Assuming Global Green Energy has a maximum capital budget of $50 million, in which project(s) should GGE invest
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