Self-Study Questions
Questions 1 through 3 relate to the following situation: Three different software projects have been proposed. All projects have an identical 8-year lifespan with cash-flow profiles estimated as shown in the following table.
| P1 | P2 | P3 | |
|---|---|---|---|
| Investment | $800,000 | $600,000 | $400,000 |
| Annual revenue | $450,000 | $400,000 | $300,000 |
| Annual cost | $200,000 | $180,000 | $150,000 |
| Salvage value | $100,000 | $80,000 | $60,000 |
| 1. | Show the matrix of all theoretically possible investment alternatives. |
| 2. | Proposal P2 is contingent on P1, and proposals P2 and P3 are mutually exclusive. The budget limit is $1,200,000. Indicate which alternatives are not feasible and explain why they are infeasible. |
| 3. | Using the answer to the previous question, calculate the cash-flow profiles for each feasible ... |
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