3. (Two-period budget ) A company has identified a number of promising projects, as indicated in Table

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3. (Two-period budget ) A company has identified a number of promising projects, as indicated in Table 57 The cash flows for the first 2 years are shown (they are all negative)

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The cash flows in later years are positive, and the net present value of each project is shown. The company managers have decided that they can allocate up to $250,000 in each of the first 2 years to fund these projects. If less than $250,000 is used the first year, the balance can be invested at 10% and used to augment the next year's budget. Which projects should be funded?

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Investment Science

ISBN: 9780195391060

1st International Edition

Authors: David G. Luenberger

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