Investment 1. Establishing and operating a consulting service expecting to service long-term growth.
Investment 2. Establishing and operating a small fashion store expecting to profit from a passing fad.
Investment 3. Invest into a portfolio of preferred stocks paying a fixed annual income.
Investment 4. Establishing and operating a fast food franchise.
|
All the projects have the same initial outlay of $50,000 except for the franchise option requiring an initial outlay of $500,000. The cash flows from each project are as follows: Year |
Consulting Service |
Fashion Store |
Preferred Stock |
Franchise |
|
Outlay |
$50,000.00 |
$50,000.00 |
$50,000.00 |
$500,000.00 |
|
1 |
$20,000.00 |
$40,000.00 |
$15,000.00 |
$100,000.00 |
|
2 |
$30,000.00 |
$60,000.00 |
$15,000.00 |
$350,000.00 |
|
3 |
$60,000.00 |
$80,000.00 |
$15,000.00 |
$350,000.00 |
|
4 |
$80,000.00 |
$600,000.00 |
$15,000.00 |
$300,000.00 |
|
5 |
$150,000.00 |
$250,000.00 |
$15,000.00 |
$300,000.00 |
|
6 |
$400,000.00 |
$20,000.00 |
$15,000.00 |
$280,000.00 |
|
Discount Rate |
10% |
20% |
20% |
20% |
