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Title: Assuming that your capital is constrained, so that you only have $600,000 available to invest in ... Post by: johnpaech on Nov 19, 2017 Assuming that your capital is constrained, so that you only have $600,000 available to invest in projects, which projects should you invest in and in what order?
A) CBFH B) CBGF C) BCFG D) CBFG Title: Re: Assuming that your capital is constrained, so that you only have $600,000 available to invest in ... Post by: deusmaroto on Nov 19, 2017 A
Explanation: A) Project Investment NPV Profitability Index Rank A 135,000 6000 0.0444 8 B 200,000 30,000 0.1500 2 C 125,000 20,000 0.1600 1 D 150,000 2000 0.0133 9 E 175,000 10,000 0.0571 7 F 75,000 10,000 0.1333 3 G 80,000 9000 0.1125 4 H 200,000 20,000 0.1000 5 I 50,000 4000 0.8000 6 This is a tricky problem in that by the rankings CBFG seem optimal, but this combination leaves $120,000 on the table uninvested. By replacing G with H the full $600,000 is invested and the NPV of the combination of projects is increased by $11,000. Therefore, you should invest in projects CBFH. Title: Re: Assuming that your capital is constrained, so that you only have $600,000 available to invest in ... Post by: johnpaech on Aug 1, 2018 Thanks for helping with my corporate finance course
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