NPV is a tool to compare alternative investment options in terms of present day dollars. Jackson Aviation has several proposals for new Jet introductions. The attached excel worksheet (CH01-Jackson_Aviation-NPV-V2.xlsx) provides the initial fixed investment and projected cash flows for the first five years for this new aircraft. The guided practice video (below) provides a solution for calculating NPV for a single investment option. You must prepare the NPV and IRR calculations for each alternative presented and then discuss how you would rank the investments and propose a recommendation, considering the fact that capital resources may be limited, requiring the company to make some consumption choices on these investments.
Review of Investment Opportunities
Period Option A Option B Option C
0 (75,000,000.00) (25,000,000.00) (65,000,000.00)
1 (325,000,000.00) (100,000,000.00) (275,000,000.00)
2 (125,000,000.00) (50,000,000.00) (110,000,000.00)
3 50,000,000.00 25,000,000.00 50,000,000.00
4 133,000,000.00 85,000,000.00 125,000,000.00
5 555,000,000.00 175,000,000.00 375,000,000.00
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