Here is the question I need to have completed. Module 4 SLP


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Here is the question I need to have completed. Module 4 SLP Decision Report SLP3.doc Introduction The report entails the analysis of two projects to determine the most suitable to invest in. The first option entails investing in real estate development. This will be regarded as option A for purposes of this analysis. The real estate is very risky in that they can have high pay-off or have none at all. The second option (B) entails a retails franchise for Just Hats. It will be a boutique type store that deals with women and men hats. It has less risk of failure but payoff is likely to be too low. The third option (option C) will entail investing in a risk free bond called High Yield Municipal Bonds. The decision will entail evaluating the projects to determine the one with the highest Expected Net Present Value. Decision based on Expected Net Present Value The computation of Expected Net Present Value is summarized in the table below: This could also be summarized in a decision tree as follows: From the anaysis, it seems that option A would be the most desirable because it has the highest Expected Net Present Value (ENPV). This means that it will be able to recover the amount invested and give higher returns than option B and also the risk free bond.

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