How would you analyze the following structured fixed income investment opportunities that require an initial outlay of $18 million initially and a further expenditure in year 5 of 20 million (assume a hurdle rate of 5%). The first investment has a cash flow return of 4.5 million per year for 15 years at a discount rate of 7%, the second investment has a cash flow of 3.3 million per for years 1-5 and and 6.0 million per year for years 6-12 at a discount rate of 6% and a third investment with a cash flow of 1.55 million in years 1-4 and 7.5 million for years 5-14 with a discount rate of 8%. What is the best investment on a net present value basis? Does it change with IRR?
Please note, I am not looking for you to solve this problem (unless you really want to). Please treat it as a homework and provide explanation on how to approach it. thanks.