Effect of Constraints on Capital Investment Decisions: Lucitania Oil Company has limited investment funds. It has $1 million available for investment. The company must choose from among three competing capital investment projects with the following cash flow patterns (in thousands).

Lucitania's cost of capital is 15 percent.

Required: How can Lucitania optimally invest $1 million among the three projects. assuming no other constraints on investment?

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Year Project 0 2 3 Alpha $(400) $100 $180 $200 $200 Beta (200) 60 80 100 140 Charlie (800) 140 300 540 400