An investor has a budget of $30 million. He can invest in the projects shown above. If the cost of capital is 5%, what investment or investments should he make?
Initial Investment Cash flow
Project A $21 million $12 million per year for three years
Project B $18 million $9 million per year for three years
Project C $15 million $6 million per year for six years
Project D $12 million $4.5 million per year for eight years
A) Project A
B) Project B
C) Project B and Project D
D) Project C and Project D
Answer: D
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