20. Capital rationing (S5.4) Borgia Pharmaceuticals has $1 million allocated for capital expenditures. Which of the following
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20. Capital rationing (S5.4) Borgia Pharmaceuticals has $1 million allocated for capital expenditures.
Which of the following projects should the company accept to stay within the $1 million budget? How much does the budget limit cost the company in terms of its market value?
The opportunity cost of capital for each project is 11%.
Project Investment ($000) NPV ($000) IRR (%)
1 300 66 17.2 2 200 –4 10.7 3 250 43 16.6 4 100 14 12.1 5 100 7 11.8 6 350 63 18.0 7 400 48 13.0 CHALLENGE PROBLEMS
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Related Book For 
Principles Of Corporate Finance
ISBN: 9781264080946
14th Edition
Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans
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