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discount rate used 10

most risky project 3


What are the other information you may require about these projects, to make an
effective decision?
-exact discount rate not given
-risk associated with every project
-we might need capital any time in between the 15 years span
4 7 1 5
least risky --4
why cash flow and not profit:
When investing money in any project we are more interested in knowing whether we
would get back the money.
Theoriticaly cash flow gives an idea about the feasibility of a company to pay b
ack the investment.Profit in a pnl statement may be misleading. In other words,
a company may bot be making any profit but still be in a situation to pay back t
he money.This is more clearly reflected in a cash flow staement.
Mutualy exclusive project : Mutually exclusive projects means if we invest in on
e project we can make the investment in any other projects.
Why projects has to be evaluated for financial feasibility? *
For investors to invest in a project we have to see if the project is financilal
ly viable.Invested capital must show the potential to generate an economic retur
n to investors
Only then the investors should invest in a specific project if it is economicall
y profitable.
Furuturistic =--yes
What is the closeness of these projects, to the real time projects executed by r
eal time business firm? *
Quantitative analysis is one of the techniques taken by business firms for inves
tment decisions but it should not be the sole reson for taking decisions.There c
an be others reasons for arriving at a decision.
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But obviously, quantitative analysis is the pre requisite for making any investm
ent decision.