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Assignment 6 Corporate

Assignment 6 Corporate - College of Business...

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College of Business Administration Northeastern University Assignment #6 Investment Detective Case Javier L ó pez Castrillo To: Professor Mazur Corporate Finance By: Javier López Castrillo 1- Can you rank the projects simply by inspecting the cash flows? Inspecting just the cash flows can give a clue of the most profitable investments, however, we cannot rank them by only looking at them because of the time value of money and the cost of capital of each company. We can look at the chart and have an idea of how much excess of cash flow each project has over the initial investment. If
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Corporate Finance Javier López Assignment #6 02/21/2010 we take into consideration the time value of money, larger cash stream in first years are better. Also, the year in which the project recovers its investment (payback period) is important to consider. By just looking at the cash flows I would say that the first project to be profitable is the project number 3, followed by projects 5,4,7,1,5,8,6 and 2. To really make a good decision between some projects we would need other
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