Which project is the most valuable

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Starbucks Corporation has decided to invest $20,000,000. The twenty million go into the R7D of new consumer products for its chains. Starbucks could realize a gain of 11% on other investments given the same amount of risk. The products and cost are as follows. a. New breakfast sandwich at a cost of $3 million b. New international dessert at a cost of $4 million c. New holistic mineral water at a cost of $8.5 million SBX has a required payback period of 6 years. Construct a timeline to answer the following. 1. What is the payback period for each of these projects? 2. Which project should be accepted/rejected? 3. Which project is the most valuable? 4. When considering the TVM which project is the most attractive? Project A Year 1 $500,000, Year 2 20,000 and 500,000 thereafter Project B Year 1 $1,000,000 and 700,000 thereafter Project C $1.5 million year 1-3 and 1.2 thereafter

Reference no: EM13276049

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