mgt201 solution

Answer
In 1ST case NPV IS 1200000 AS MENTIOND IN QUESTION
IN 2ND CASE WE FIND THE NPV WITH THE HELP OF FORMULA
NPV=CFO+∑CFT/(1+I)T
NPV=400000+1200000/(1+.15)4
NPV=400000+1200000/1.7490
NPV=400000+686106
NPV=1086106
THE 2ND CASE NPV IS 1086106
NOW 3RD CASE NPV
NPV=CFO+∑CFT/(1+I)T
NPV=400000+240000/(1+.15)2+300000/(1+.15)0.6+200000/(1+.15)0.6
NPV=400000+24000/(1.15)2+300000/(1.15)0.6+200000/(1.15)0.6
NPV=400000+181474+275868+193812
NPV=1041254
IN 3RD CASE OUR NPV IS 1041245
NOW COMPARING THESE NPV,S MR AMIR PURCHSE THE CARE FROM HIS FRIEND AS ITS NPV IS LOWER