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A firm with a 13% cost of capital must select the optimal group of projects from those shown in the following table, given its capital

A firm with a 13% cost of capital must select the optimal group of projects from those shown in the following table, given its capital budget of $1 million.

Project

Initial Investment

NPV at 13% cost of capital

A

(300,000.00)

84,000.00

B

(200,000.00)

10,000.00

C

(100,000.00)

25,000.00

D

(900,000.00)

90,000.00

E

(500,000.00)

70,000.00

F

(100,000.00)

50,000.00

G

(800,000.00)

160,000.00

Calculate the present value of cash inflows associated with each project.

Select the optimal group of project, keeping in mind that unused funds are costly.

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