Question

you are the CEO of warming up inc. the firm faces the following five investments that...

you are the CEO of warming up inc. the firm faces the following five investments that are mutually exclusive. which one would you pursue?

a. Increase next year net income $70m, + Long term debt by $280m, and increase market value equity $490M

b. +$140m Net income, + $70M Long term debt, + $340M equity.

c. + 705M net income, +140m long term debt, + 165M equity.

d. + 210M net income, +210M long term debt, +420M equity.

e. + 140m net income, +70M long term debt, +280M equity

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Answer #1

Answer-

The correct Option that should be pursued is c. + 705M net income, +140m long term debt, + 165M equity

Among all the Options we need to add up the Nt income and Equity and subtract the long term debt and we will get

$ 750M + $165M - $140 M = $ 915M - $140M = $ 775M

The other Options are incorrect,

Option a----- $70m + $ 470 - $ 280m = $ $ 260M
Option b----- $ 140 + $ 340M - $70M = $ $ 410M
Option d ----- $ 210M + $ 420M - $ 210M = $ 420M
Option e ----- $ 140M + $ 280 M - $ 70M = $ 350 M

Considering all the Options we can see that Option c has the highest overall return of $ 775M

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