Individual Test:

A company is considering making several investments in the Production

facilities for the new products with an estimated useful life of four years

Year Project A B C D
Initial investment (1000$)
0 (900) (1,000) (800) (1,500)
Cash flow (1000$)
1 120 200 100 300
2 250 300 250 400
3 400 500 350 700
4 600 600 500 1,000
Asset liquidation in year 4 (%)
10 15 8 10
Interest rate of bank in year 1: 8%; year 2: 8.3%, year 3: 8.5% and year 4:
8.8%.
Propose an investment plan to optimize:
1. DPP?
2. IRR?
Request: The indices are calculated according to discounted cash flow!