Question

The table below lists the independent projects that your company is considering to invest: Project Initial...

The table below lists the independent projects that your company is considering to invest:

Project Initial investment (USD) NPV (USD) IRR (%)
A 200000 52131 9.23
B 410000 48192 8.95
C 290000 -24690 7.47
D 320000 75239 9.49
E 510000 51693 9.24
F 260000 68092 9.54
G 220000 49171 9.64

The required return is 8.1 percent. If there is an investment budget ceiling of \$1,000,000, what is the total net present value of investment opportunuties missed (the sum of NPVs of the feasible projects that your company couldn't invest) due to budget limit?

 99885 51693 126932 127370 103824

Select the Projects which gives higher NPV

 Option Projects Selected Capoital Invested NPV Ranking A G,F,D,A \$ 10,00,000.00 \$   2,44,633.00 1 B G, F, E \$   9,90,000.00 \$   1,68,956.00 3 C G,F, B \$   8,90,000.00 \$   1,65,455.00 4 D D,E \$   8,30,000.00 \$   1,26,932.00 6 E D,B,A \$   9,30,000.00 \$   1,75,562.00 2 F E,B \$   9,20,000.00 \$   1,52,016.00 5

Now Project is selecting Projects G, F, D, A and Loosing Projects due to budget Limit are B,E

As C has -ve NPV, It will always rejected.

NPV of B& E is [ 48192+ 51693 ]

= \$ 99,885

OPtion A is correct.

Earn Coins

Coins can be redeemed for fabulous gifts.

Need Online Homework Help?

Most questions answered within 1 hours.

Active Questions
• With the aid of a Jablonski Diagram, describe why an emissive process is always observed at...
• 6. Suppose we go back to the example from question 3. Suppose the probability remains at...
• Write an abstract paragraph (50-100 words) for a research proposal about the racial discrimination in the...
• The contract curve represents options for a union contract that are A. Less efficient than the...
• Consider the following allele frequencies for three SNPs SNP1 SNP2 SNP3 Africa A:20%,T:80% G:70%,T:30% C:20%,A:80% Asia...
• Examine the impact of local and national cultures, institutions, ideas, decisions, or processes on the First...