How should the investment opportunities be ranked

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Glarus Co is considering four separate investment opportunities but only has limited funds to invest during the current year. This means that the company will not be able to invest fully in all four opportunities. Each investment opportunity is divisible (i.e. it is possible to undertake part of an investment and to receive a pro rata return). Details of each investment opportunity are as follows:

Investment opportunity       Initial outlay PV of net cash inflows

                  £m                           £m

Kurai            186                       211

Barisan          65                      84

Carnic             100                  120

Flinders             50                  71

Problem 1: How should the investment opportunities be ranked if Glarus Co wishes to maximise the wealth of its shareholders?

Reference no: EM132757402

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