Question
A factory has a $100,000 capital budget and these investment opportunities: Project First Cost Annual Benefits Life Salvage Value A $50,000 $13,500 5 yr $5,000
A factory has a $100,000 capital budget and these investment opportunities:
| Project | First Cost | Annual Benefits | Life | Salvage Value |
| A | $50,000 | $13,500 | 5 yr | $5,000 |
| B | $50,000 | $9,000 | 10 yr | $0 |
| C | $50,000 | $13,250 | 5 yr | $1,000 |
| D | $50,000 | $9,575 | 8 yr | $6,000 |
a) Determine which project(s) above should be funded based on IRR and available budget..
b) What is the opportunity cost of capital?
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The TL 9000 Guide For Auditors
Authors: Mark Kempf
1st Edition
087389510X, 978-0873895101
